May 2, 2017 ยท 2 minutes

Late last year, Paul wrote about the outsized influence the German government has on Valley tech giants like Google and Facebook.

The reason? The country’s willingness to impose huge fines for extremist content and fake news.

Inside Facebook, rumblings from German lawmakers represent a very frightening data point indeed. In fact, it’s probably true that -- with the possible exception of the UK -- Germany is the only European country capable of putting the fear of God into Facebook.

To understand why, you have to understand that very often where German politicians go, so too does European law. The Germans wield huge control inside the EU, all the more so after Brexit. If the Germans get the idea that Facebook has got too big or dangerous for its books -- like Google and Microsoft and Uber before it -- then it probably won’t be long until EU lawmakers start to get the same idea. Down that path lie antitrust investigations, new media laws, fines and more. In other words, doing business in Europe becomes a much, much bigger pain in the ass. Or indeed arsch.

Paul has compared German’s laws to those in the UK where, until now, the government seemed unwilling to threaten any laws that might frighten away US tech companies. The result was something close to open contempt shown by Facebook, Twitter, Google et al towards the UK parliament…

Companies like Facebook, Twitter and Google might have people nominally in charge of their European or UK policy but nobody seriously believes that the real policy decisions on cyberbullying or hate speech or fake news are made anywhere that isn't served by Caltrain.

Pickles, Barron and Milner were the corporate equivalent of those stuffed dolls soldiers use for bayonet practice. They might have been wearing enemy uniforms and it might have done wonders for the MPs' morale to twist the blade, but let's not kid ourselves that the real villains – the Zuckerbergs, Dorseys and Pages – felt even the slightest twinge of discomfort.

Until now.

On Monday, the British parliament finally found its teeth -- by taking its cue directly from Germany. In a report titled “Hate crime and its violent consequences,” lawmakers said Google, Facebook etc were “shamelessly far” from tackling extremist and fake content and recommended a series of steep fines, exactly like those used in Germany.

“Social media companies currently face almost no penalties for failing to remove illegal content... “We recommend that the government consult on a system of escalating sanctions, to include meaningful fines for social media companies which fail to remove illegal content within a strict timeframe.”

Europe’s role in tech is only going to become more pronounced, given how large companies like Amazon, Facebook, Apple, and Google have grown, and how dominant they have become when it comes to almost every industry, most notably online advertising. It’s 85% dominated by Facebook and Google now, and their share of the market is growing.

And don’t forget: Aggressive acquisitions have been a big part of many of these tech giants’ growth so far.