A lot of this new regulation is not going to help Europe catch up with Silicon Valley
Nick Clegg is sitting in a spacious home office in California with an intimidatingly large, fully stocked bookshelf behind him.
“Don’t worry, I haven’t read a lot of them yet,” the former British Deputy Prime Minister says when I apologise for my relatively spare, non-bookish Zoom backdrop.
There can be few more interesting jobs at the intersection of tech, politics and society at the moment than Nick Clegg’s.
After a rollercoaster career in UK politics, where he led the Liberal Democrats into a coalition government with David Cameron’s Tory Party, Mr Clegg was approached by Mark Zuckerberg and Sheryl Sandberg two years ago to improve Facebook’s image and messaging, particularly in Europe.
Since then, Mr Clegg has been a lightning rod for the company as its head of global affairs, encouraging more openness on policy from the social media giant, especially from the famously introverted Mark Zuckerberg.
Last month, he weighed in on an issue happening in Ireland’s courts that could prove to be one of the deadliest regulatory icebergs that Facebook — and all big digital firms — have faced in Europe for years.
That issue is the Irish Data Protection Commissioner’s preliminary order to stop Facebook transferring users’ personal data to the US.
This has the potential, Mr Clegg says, to “grind to a halt” data transfers in and out of Europe, putting millions of jobs at risk.
“It’s almost inconceivable that governments, as they start to appreciate the potential enormity of this issue, would sit on their hands whilst the international data transfer mechanisms upon which so many thousands, potentially millions of companies rely on, grinds to a halt from one moment to the next,” he says.
The core issue behind the Irish DPC order and the main European Court rulings that prompted it, is that the EU and the US do not agree on what an acceptable level of ‘security surveillance’ of citizens’ data is. American authorities claim a national security right to monitor some communications, including that of EU citizens. European authorities say that this breaches EU fundamental privacy rights.
This has led to European courts and data protection agencies ruling that data transfers cannot proceed as normal anymore under the same legal cover of the widely-used ‘standard contractual clauses’.
The problem that Facebook, and thousands of other firms, have is that they don’t appear to have a Plan B to this.
“It’s still not obvious to us what the alternatives are [to standard clause contracts], nor do I think it’s obvious or to the thousands of companies that rely on them,” says Mr Clegg.
This line of argument caused controversy in the High Court last month, when it was interpreted as a warning that Facebook may pull out of Europe unless the regulatory situation changed.
At that time, Mr Clegg was quick to say that Facebook wouldn’t actually be pulling of Europe but that it simply didn’t know how to proceed.
Facebook is arguing in the Irish High Court that the Irish regulator has taken the decision prematurely and should wait for other political and regulatory processes at a European level to be given a chance first before such a doomsday scenario for digital transfers is made to stick.
“We’ve just arrived at a time when companies have learned how to shift to online commerce precisely to survive through this terrible pandemic,” says Mr Clegg. “If you’re going to pull the carpet from under their feet by not allowing the data transfers that are completely routine for thousands of companies in the EU, this would have a significant cascade effect on the various parts of the economy from manufacturing to health care. It’s particularly important for a country like Ireland, which really does sit at the heart of the global data economy in so many respects.”
Regulatory orders in Ireland, where Facebook’s Europe, Middle East and Africa operations are headquartered with some 4,000 employees, are not the only data transfer issue facing Mr Clegg and the company.
If Britain leaves the EU without a trade deal, that will create significant problems for data transfers between the UK and Ireland, as well as between the UK and the rest of Europe.
Asked about this, Mr Clegg says that the company is considering “contingency planning” but declined to elaborate.
The former Liberal Democrats leader follows political affairs closely in London and shakes his head when asked about the prospect of a ‘No Deal’ Brexit.
He’s also not convinced that Boris Johnson’s administration fully knows what they’re doing on the digital consequences of ‘No Deal’.
“I’m not entirely sure that the full knock on effects have been properly understood,” he says.
“It would be tremendously grave. It would cause immense disruption.”
Mr Clegg also laments the language from London.
“There’s a slightly artificial quality around the debate as if negotiations would never have to happen or could be avoided forever, particularly in the political rhetoric in London. If there is no deal, new arrangements will eventually have to be put in place, whether it’s how airplanes land or how data is transferred in and out of the UK. So it’s not as if a no-deal absolves the UK of the need to enter into negotiated arrangements with its largest trading partners in the European Union. It’s just going to be like trying to put Humpty Dumpty back together again.”
One of Mr Clegg’s trickiest jobs is trying to tackle European antipathy to large US tech companies. Facebook and Google, in particular, are often vilified among European politicians, media and regulators. Each of these constituencies sees some form of existential threat from Silicon Valley’s biggest exports. The issue is compounded by having few home-grown rivals to battle the American tech giants.
Whereas Ireland is industrially dependent on tech multinationals, France and Germany have very little skin in the game to counterbalance a feeling of losing cultural control to Californian decisions.
Other than scathing editorials and hardening political rhetoric, the spirit of this antipathy may soon be solidified in a raft of new regulations across Europe that would tighten conditions for US tech companies operating here.
While being a former pro-European MEP, Mr Clegg says he concerned about rising digital protectionism in the EU.
“My fundamental point is that Europe will never be able to compete at scale without a better single digital market,” he says.
“Scale really does matter. The reason why China and the US have been able to form these extraordinary successful large online companies is principally because of the size of their own domestic markets. The worry I have is that European Union decision makers will now spend several years on a raft of new laws and regulations, without actually doing the homework.”
I ask him whether he believes there is an anti-American or anti-Facebook sentiment among European policy makers.
“My concern is not to speculate, as you’re inviting me to, on the motives,” he says.
“But it’s more on what the effects are of this current approach that appears to be solidifying in Brussels and the EU institutions. A lot of this new regulation is not going to help Europe close the cap with Silicon Valley and with China. Regulations don’t close economic and technological gaps on their own, thriving, sizable markets do.”
For the next 10 days, Mr Clegg’s attention will be drawn to the US election and Facebook’s increasingly active role in policing content around the campaigns.
Last week, the heated world of social platforms, politics and media collided noisily when both Twitter and Facebook stepped in to prevent a controversial and disputed New York Post story about Joe Biden’s son spreading in the normal way on their services.
US Republicans were enraged, as was the New York Post and some other media outlets.
Is Facebook being drawn into a deeper, more sensitive editorial role with regard to media and politics?
“It’s a very fraught and difficult area,” he says.
“I will draw your attention to the significant qualitative difference between what we did and what Twitter did. Twitter basically just blocked it [the New York Post story] altogether. They went even further than that at one point, they even took down pages. I think they blocked the Trump campaign’s Twitter account altogether. We didn’t stop people from finding that information from the New York Post. What we did was something subtly but importantly different, we just reduced the circulation of it to allow our network of independent fact checkers look at it.”
2021 looks set to be no calmer for Mr Clegg than 2020 has been.