Facing reality about the EU is a core requirement for good management

What amazes and perplexes me is that Apple thinks it can effectively play politics against the EU and that somehow their customers will back them in the face of the "consequences" Apple applies, which are pretty transparent and really quite amateurish (eg no more web apps for you!).

As the article states, the first mistake Apple makes is thinking the EU is somehow like the US, but I can't see how any large proportion of Apple's customers will back Apple's actions against their own government. EU citizens haven't been brainwashed into thinking that their government is their enemy, at least not to the same extent as the US.

I understand where the author is coming from and It is important to have a realist perspective on what is driving European strategy or else we will be in denial.

I think it's also important to recognize that the west are interconnected in many real ways beyond economic. The first and most clearly top of mind recently is the US defense umbrella which allows the EU to invest on other things instead of defense. Another less talked about is how the US subsidizes most of global R&D for healthcare by virtue of the obscene amount Americans pay and hence make profitable that industry to the benefit of all of humanity.

For American companies to contemplate selling into or building offices and having employees in Europe is to contemplate a set of trade-offs.. there's a reason why European employees are typically paid far less, it has to do with the fact that there's far less flexibility if they are a bad hire coupled with the fact that they have much better benefits provided by their governments and hence their money goes a lot further. That is of course related to the fact that they are not generally paying much for defense.

Everyone is self interested and when we see the Europeans talk about human rights on the one hand but then do big wine and dine trips in China to sell their luxury goods on the other hand you see clear evidence of that fact.

As much as many Europeans may loathe the united states, in the grand scheme of things we are far more interwoven with each other and ultimately entering a new cold war with China and decisions will need to be made over time around where to place bets around self-reliance. I'm sure Europeans love to sell to China but they will not love the glut of Chinese Imports that will decimate their protectionist economies at a level far more aggressive than they've ever experienced across the Atlantic

I quite like the article as far as it goes; but this begs the follow up question - is the strategy working? Because for all their standards and harmonisation, the manufacturing is happening in China and the decisions are being made in North America. This should be an article about how Nokia or equivalent is approaching the US all wrong and not understanding the realities on the ground.

I'd put energy in a similar frame. Energy matters a lot, and for all the optimistic noise around the Energiewende, the solar industry ended up in China. Wind power Europe has managed a company in the top ten, so that is pretty good [0]. Given the growing energy crisis in Europe, this seems to be an area of failure that needs more focus in how the common market is performing.

The EU's successes seem a bit mild. I remain sceptical that harmonizing charging cables is an important enough dot point to appear on these lists, it looks like there is just a lack of success stories out of the EU. The failures are catastrophic; last I heard the farmers had just started rioting too [1] which is a bad omen.

[0] https://www.zippia.com/advice/largest-wind-power-companies/

[1] https://www.theguardian.com/environment/2024/feb/26/farmers-...

A common mistake is to think that the EU is limited to a few large economies (Germany, France, Italy, Spain, Holland), but this is not the case.

Ensuring that a Croatian SME can win contracts with the French or Germans is one of the EU's priority objectives. This is how the EU has lifted millions of people out of poverty. This is a very tangible reality. It worked with East Germany, Spain, Poland, the Baltic States and now the Balkans.

The European Commission is litteraly there to ensure that a water heater designed by an Italian, made by a Romanian from Polish steel, inspected by an Italian and put on the market by a Frenchman guarantees high quality standards. They take this mission very seriously because it's not just about protectionism or trade competition. It's a political project of peace and improvement of the living standards for Europeans.

You'd have to know very little about the European Union to believe that it was prepared to negotiate or grant a free pass to Apple.

Finally more people are figuring out that the EU is a net positive and not a net negative. Love my Europe.

This reads like a 10th graders report, just repeating arguments found on the internet.

The criticism of forcing apple to abandon a superior connector for phones to standardize charger cords, while every other building you go into in Europe has a different outlet that is incompatible with the charger you want to plug in is perfectly reasonable. The idea that there is some great benefit to making sure there is only one connector on the so cheap they are basically disposable cords is fundamentally stupid. The fact that the EU regulators can arbitrarily go after companies is a real problem.

"They were behaving like Elon Musk. And we certainly don’t want more Elon Musks in the world."

I'm not a fan of his behaviour on Twitter, but the idea that the world does not want more Elon Musks seems insane to me.

Theyre not for me personally, but whatever you think about Teslas I don't see how you would not want a person who can build a new car company. Just look at other entrants like Rivian, it's so hard, and he managed to will that into existence.

The fact that I can then move onto SpaceX is unbelievable. He willed reusable rockets into existence and made it into a sustainable business. Starlink, just look at starlink. Where is Blue Origin?

Would we really not want more of that, even if it led to more nonsense on Twitter?

At least in the case of Apple, it’s not at all specific the the EU. That company is run by children.

Everybody who works with Apple, be it developers or suppliers complains about how shitty they are to work with. They maintain relationships by the strength of their market power alone. Bridge burning is ingrained into the company culture.

Apple is treating the EU like they do everyone else: they are being dicks. Unfortunately they seem to have missed that the EU is not able to be bullied or pushed around.

Are there any counterexamples to what the author presents as the inevitability of European open market regulations?

And we certainly don’t want more Elon Musks in the world.

Boy, wouldn't it be horrible if we got more Tesla's, SpaceX's, Starlink's, and freedom of speech on social media in the world!

Editorialided headline, the title is:

Facing reality, whether it’s about Apple or the EU, is a core requirement for good management

Reminds me of trump repeatedly trying to make trade deals with individual EU countries.

Only had to explain it 11 times until for it to sink it.

https://www.businessinsider.com/trump-trade-merkel-germany-e...

But the single market is what it’s for. Without it, the EU would cease to exist. To understand what motivates EU, as an organisation, you need to understand the single market.

Whenever I point out on social media that the single market is the purpose of the EU, I get bombarded by replies saying: “No you’re wrong. The EU was founded to preserve peace in Europe. Gotcha!

I think the author is right here, and that this misapprehension is way too common.

The EU was a way for a bunch of colonizing countries to get rid of their colonies and still keep their level of wealth. Call it "peace" but that all comes back to having enough economic productivity that had previously come from their colonial wealth extraction.

I think that to the extent that the EY does not understand that it's there for economic productivity, the more that the EU will fall further behind the US on productivity and wealth of the populace.

You can say the EU is doing good or bad, but what is reality is that this blog post is ignoring is that the European economy is kind of just falling apart right now directly because of these types of regulations and reforms.

German labor unions are the weakest they’ve been in decades, Europe as a whole is an incredibly undesirable place to run a business in 2024, and EU companies have rested on their laurels so long that they couldn’t hope to even match American and Chinese R&D numbers in the next decade because of these types of regulations pretty much enforcing the status quo.

Europeans have just relegated to the fact that they will always be subservient to American tech companies, which is just brain dead economic policy that will reverse course in 5-10 years once France and Germany shake hands and realize they’ve just fucked themselves over again.

I know it’s not about that, but if you’re going to use anecdotes they should be accurate. The only people who think the EU is doing a good job handling tech are populists, not economists.

Everything you need to know about government bureaucracy, including the EU’s, you can learn from watching the TV show “Yes, Minister.”

The discussion about Apple is kind-of meh, as apple is not such a big deal in europe, as most phones are not iphones.

But the nostalgic view of the EU as some kind of free market pioneer is stuck in the 90s. Today's world and EU are very different. Nobody rememebrs WW2 and europe is too weak to start another war. The protection from external threat (russia) is coming from the USA, and russia won't last very long anyway. Standardization is something that is happening in all global markets, not just in the EU, and that's how we have resorted to using the same standards with everyone in the world (including on the internet), not just with europe. The USB-C became a global standard because it dominated in the free market , before the EU standardized it. The single market is becoming a laggard , the global markets are dynamic enough to create their own standards, fast, now (e.g electric cars)

Despite costly standardization processes, european brands did not gain in worldwide reach and competitiveness, in fact they have lost for the past 20 years and more. There used to be strong international brands (philips? siemens?) which are now much less global and arguably have lost from chinese and US companies. EU Cars are a strong market, but look at where these cars are made and sold, China is their main target market, not the Single market anymore. You rarely-or never- hear about a EU company that found EU-wide success before it became a global success.

What the EU does have a is a lot of money, to subsidize businesses all over EU , but that has ended up eroding competitiveness, because companies end up competing for funds instead of competing for profits. The single market is of course a great idea, and mandatory in today's globalized world, but the EU today is much more than that.

There's also another option where Apple is just going to wait/lobby the US government to apply pressure on the EU in the hope that this is effective (as it has been historically). In in the event of another Trump presidency (let us hope this doesn't happen) this is very likely to happen and Biden has made some moves in this direction. The fact that Europe is 100% reliant on the US to stop the Russians conquering Ukraine at the moment doesn't really help.

See for example this letter https://www.reuters.com/technology/us-lawmakers-urge-biden-p... or https://www.politico.eu/article/senator-ted-cruz-slams-us-ag...

The single market is, from the perspective of the EU itself, its single most important project.

although i am not of course the eu itself, nor do i even live there, i think this is incorrect

world war i lasted from 01914 to 01918 and killed 17 million people

world war ii in europe started 21 years later, lasting from 01939 to 01945 (though it started earlier in china) and killed 73 million people, mostly in russia

the 'european communities' were founded in 01952, 7 years later, and later grew into the eu. their single most important project was, and is, preventing or at least delaying world war iii, because it was, and is, widely believed that world war iii will kill a substantial fraction of the world's population, reducing the level of human development substantially and possibly causing human extinction

this is commonly believed to be more important than the single market, even, i venture to say, within the eu

world war iii may have started now; in retrospect, we may decide that it started in february 02014

the post is of course correct that the single market was a major instrument of this peace from the beginning, but it was and is only one such instrument, not the final product. in terms of keeping governments from bombing each other, probably the atomic cooperation is even more important

This honestly just sounds like a lot of whining from the author.

As someone who’s set in rooms with loads of regulators

(1) you can pretty much always compromise with them.

(2) they want to ensure criteria is met & typically not penalties nor want you to leave a market

It’s more accurate to think of regulators as customers. They just have different requirements they need to solve their problem. Rarely are they protecting consumers imo. Usually they’re there protecting government or other powerful interest.

Regardless, we would do something similar to Apple with regulators. “Look it’ll take 18 months to implement X. It’ll also cost $Y. If you push this issue we won’t make a profit and we will exit the market. Are you sure you want us to do that?”

“No no no. We just need this and that safe guard in place.”

“Alright, we can implement the first one in 2 months, that last one will take time, let’s work on a roadmap.”

And that’s how it really functions.

The author is right but makes a similar mistake as the Americans, given he’s European. He does not clarify what market means. This can be perplexing and misunderstood by an American audience.

Market in the US is such a different thing. American companies like TurboTax and Comcast are operating (by American standards) right within the market. In fact, probably “better” than everyone else. The market is a Wild West where the goal is domination of a segment, ideally multiple ones. Like United healthcare is today.

In the EU markets mean competitive (more traditional) markets. For instance, the telecom roaming charges he brings up, are a perfect example of a Comcast-like perverted industry that simply got broken up. It used to be ludicrous prices - pushing people towards hotel WiFi or a surprise bill - then suddenly there are 10s of GB free. Nobody died and everyone got it better.

In America, this would be the equivalent of waking up one day and ISP prices had dropped by half and there are 10 providers to choose from, basically no matter where you lived.

Having lived in the US, nobody expects this. Even with things like student loan forgiveness, universal healthcare etc nobody actually expects these things to come without absolute giant catches - layering of new bureaucracy and hidden fees. So there’s a skepticism against these things. By extension, there is skepticism against the EU. “What are they up to, those sneaky fucks?”

As a European with a decent leaning towards classical markets and liberalism, my take is that the US has truly reached market perversion, to the extent that Milton Friedman would roll in his grave. The neo-liberalist pro-corporate tilt that we're seeing in the US today is beyond what I’d argue even the most laissez faire economical thinkers of the 20th century. It’s the opposite of what a free market should be. All the arguments for economic liberalism are based in the freedom to compete fairly. Without that, it’s just oligarchy with a different flag.

In fact I’m really amazed that Apple is trying to play games trying to circumvent a brand new regulation (the DMA), while totally ignoring the fact that they are amongst he primary targets of those regulations. It’s like they don’t understand that any circumvent will just sharpen the 1.01 version of the regulation.

They are only gaining some time until the next iteration but it just shows that they are afraid they can’t function anymore by just providing greater products than competitors. DMA isn’t banning the App Store, it still can be the number one store and it still can be a money printer. Except that it will have to be better than competitors.

There are a few examples of this trend towards denying reality. The starkest one being Elon Musk behaving as if European labour unions don’t exist and that labour is entirely powerless, leading his companies to lose money on strikes and other collective actions.

And we certainly don’t want more Elon Musks in the world.

I can agree that labour unions are real, but I see little evidence that Elon Musk denies reality. Maybe that's the picture you get when you read only the news. If you watch any full length interview with him he seems pretty down to earth (or "grounded" if you want to call it like that).

"Remember what I wrote about electrical plugs? The EU is pro-business – often criticised for being essentially a pro-business entity – and not in favour of regulation for regulation’s sake."

Complete nonsense, where is the competitor to Apple in Europe? Google? Meta? SpaceX? Microsoft? Overregulation is completely destroying the market in which the whole power is consolidated to a few big monopolistic players backed, and liked by the EU. They are completely suffocating small, and medium businesses.

Brussels was on fire just the last week if you haven't seen the news, farmers from all over Europe are protesting, because they are being suffocated with regulation to the point they need to throw their productions on the streets, and file for bankruptcy.

I also find pretty funny the USB-C standardization praise as some sort of genius move by the EU bureaucrats, especially since Apple in 2015 decided that USB-C is the future and the whole industry followed.

A single market is a totalitarian market it has nothing to do with free trade.

"Any time you see two entities of similar size fight"

The EU and apple are certainly not of similar size. EU represents one sixth of the global economy (20 trillion) apple with 230 billion is a tiny insect in comparsion.

Ironically, many of Apple's most aggressive policies are designed to protect its own 'Single Market'.

The author makes some good points.

But then he also spends the few paragraphs laughing about executives operating based on beliefs/ideologies instead of facts.

Just to talk about EU letting some countries sliding into fascism.

Fascism : a political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition

It seems that the author is also reasoning by pure ideology, ignoring simple facts.

Absolutely no countries in the EU are remotely close to being a fascist state.

The title of this piece is actually: "Facing reality, whether it’s about Apple or the EU, is a core requirement for good management"

Nicely written. Great management processes the reality of workplace and society, and applies that information to maximize their employees' effectiveness. Managers are human and thus they have opnions, but great management doesn't let their opinions cloud their judgement when it comes time to manage.

I'll admit that, as an engineer, I appreciate that someone is trying to rein in my industry's worst instincts, even if that someone isn't America and they aren't necessarily succeeding on every front. So yes, I have a bias.

"To Apple, the App Store is a side line."

"And we certainly don’t want more Elon Musks in the world."

Apart from these 2 statements, I largely agree.

This is a really excellent article. It's very important to have a good understanding of what the other side's argument actually is in situations like this. EU politics is not at all like Anglosphere politics; it remains very machine-technocratic, rather than the clickbait-circus that dominates Anglo politics at the moment.

You could just write "PESTLE analysis" and be done

You can’t be a good manager or executive, in any industry, if you operate in constant denial of the facts on the ground. Arguing from ideology or beliefs that aren’t grounded in observation, measurement, or study, is the hallmark of a politician or media personality, not a manager responsible for other people’s jobs.

This makes me think of John Mearsheimer’s breakdown of realism vs liberalism in the context of inter relations on Fridman’s podcast. He suggests American leaders are particularly idealistic (operating on “should”) whereas others are realists (operating on “what is”).

I wonder if its more universal than political leadership.

Apple is a bully. It is a bully well because it needs to show growth. Without growth their stock get hit and the leadership feels pain.

Apple is in a tough position. It is losing market share in China to Huawei. The Chinese economy is feeling the pinch and they are spending less.

EU is hitting them with fines.

In US they aren’t growing much. The Vision Pro was a dud.

The easiest option is to be a bully.

But the single market is what it’s for. Without it, the EU would cease to exist. To understand what motivates EU, as an organisation, you need to understand the single market

The author writes that really the only point of the eu is to be a single market, but that’s not true.

It has other goals, well stated in its principles and values, in which one is “establish an internal market.”

It’s important because it’s a common right wing talking point where I live in the EU. The right wing use it as an argument for making EU weaker, because they think that it “has moved away from its original purpose, to be an economic union.”. No, its stated aim and values are not just that but many other. The author seems to make an argument the other way around, that it is only an economic union; there is a disconnect and both parties are wrong. It is not just an economic union and its stated goal was never to just be one.

I also take issue with the claim that EU thinks an all-seeing surveillance state is a good thing. They recently repelled the chat control law proposal, and I know they consistently condemn Swedens surveillance for being too intrusive. This just doesn’t match with what he is saying.

But I digress. It's important to realize that if you only understand eu in terms of a market without its other values, then you as a company might be working against their stated goals and be punished for other reasons. The author is far too reductionist.

Well designed argument, the weird Elon Musk references aside.

This is a very good article. Overall, I believe that the American lifestyle, media, and politics are so pervasive and have such a global reach that many American managers (as well as academics) find themselves unable to work internationally.

They truly believe that everything operates just like it does at home, and, on the surface, it appears to: everyone speaks English and has watched Friends.

However, institutions are complex and multi-layered entities. Americans often struggle to deeply understand the institutional specificities of other countries, resulting in behavior that can be perceived as lacking humility or even as arrogant—worse yet, as superficial. A case in point is Apple.

It's paradoxical: the more global your home culture becomes, the less able you are to perceive nuance and depth.

Expected some meme-worthy content about bad EU-regulations and such. Was surprised to read a well thought out piece about how good managers have to accept and work with facts and reality.

Take my upvote!

This article feels fairly naive to me. One possibility is that the EU is doing what is written on the tin and executives and companies are foolishly misunderstanding.

Another possibility is that reality is more nuanced and that executives are playing edge cases where profitable, like they do in other countries and jurisdictions.

Instead of seeing the EU (or any other system) explicitly as what is described in founding documents or official meetings, there is another perspective.

https://en.m.wikipedia.org/wiki/The_purpose_of_a_system_is_w...

Can't believe this had to be spelled out... The article is very well written and simple to understand, so hats off to the author.

Ironically, I've been putting off buying an iPhone because of the walled garden... Being able to side-load app stores and charge via USB-c might actually get me to switch. Because the surveillance inside Android apps is frankly obscene at this stage.

And, as an institution, they are largely all too convinced that an all-seeing universal surveillance state would be a good thing, actually.

Not that I disagree, but where is the light in this tunnel? Increased police surveillance seems to be a common theme in USA, UK and Australia. And countries with less advanced democracies--to say nothing of Russia or China--are not climbing faster into the surveillance wagon mostly because of financial reasons.

I think the one place where the author is mistaken is in the incentives for these big tech companies.

I think they fully understand what the EU is about. If Apple can delay for a month or a year on giving the EU what they want it’s very unlikely that any fine is going to be a net negative for them. One more month of the App Store pulling in its Monopoly money is a huge amount of revenue for Apple. One more month of Facebook collecting private data is another month of higher profits.

The EU cellular companies benefitted from the removal of roaming charges but Apple won’t benefit from being forced to allow alternate app stores.

Corporations in Europe may benefit from their single market regulations but not many corporations in the EU are the size of Apple or Google and have the same profit incentives.

(I also think that equating Elon Musk’s bad management to companies like Apple and Google that have generally good management is something of a false equivalency)

"(...) best seen in the popularity of mass lay-offs – a strategy that has been resoundly proven to be counter-productive, costly, even disastrous, along multiple dimensions, over multiple decades of study."

This is the first time I read that big layoffs are "disastrous" for companies vs. some other approach in these situations (other maybe than the rather obvious fact that companies who are conducting mass layoffs are often in dire straits to begin with). I'm assuming "for companies" is implied here, because the way I read the sentence, the author is saying doing mass layoffs is misguided from the point of view of company management, not someone altruistically trying to maximize welfare in society overall or something like that. Does anyone have a good source for this?

I guess this is a good summary from someone with a primarily positive view of the EU.

I’m a EU citizen with a more negative view of the union. Core to my understanding of the EU is the idea that “Europe is a garden, while the rest of the world is a jungle – we have built a garden” [1]. It’s a fundamentally different approach to legislation: instead of thinking about what rules would be fair and reasonable, European politicians start with the end result (“the garden”) and try to craft rules that will accomplish that result. If the rules turn out to be unreasonable from some perspective… “well you can’t make an omelette without breaking a few eggs”. For Americans, coming from a common law system, this has a totalitarian feel to it. At least that’s my personal feeling.

1. https://youtu.be/ufAHg6hN4OA?si=OaZE89rGTZOtE0Hk

Really great article! With simple yet profound and general observations, such as:

The EU, as an organisation, has a specific economic theory that guides most of its actions. Once you understand the theory, they become very predictable.

Any time you see two entities of similar size fight, bet on the one that thinks it’s fighting for its life.

Speaking of facing reality about European politics, the so-called “fascism” that commentators such as this like to clutch their pearls over bears absolutely no resemblance to any of the actual 20th century European fascist movements. It’s just plain old Christian Democratic centrism of just a few of decades ago, of which coincidentally the EU happens to be the very brainchild.

Anyone who values the EU single market should be very wary of pushing the Overton window so far to one side that the values that it was founded on and is sustained by falls off the other edge, and this goes for both directions, left and right.

But that is nothing compared to the reality that the EU is not facing:

You know who is even more important than the EU to the peace and security of Europe?

The United States.

The audience for the whining of the American tech companies isn’t the EU consumer, it’s the US voter.

They are pushing the narrative that the EU is a bully beating up on innovative American companies.

And with the rise of the “America First” isolationist faction in the US, they might find an audience for the US Government to start taking action against the EU and/or retaliate against EU companies for the perceived bullying of US companies by the EU.

It's rare to find someone with a very different starting point of view, and still don't feel any antagonism at all during the reasoning.

As an European for example I would attribute most of his general criticism of EU to the US but after much entrenching on "Apple vs EU" this felt like a reasonable third view.

Kudos to the author

I mostly disagree on the analysis, because it starts from the premise that Apple will lose more by continuing with the current stance. IMHO, that's backwards: being a for-profit company, Apple (and to a lesser extent, Google) has been using every lever they get to stall for time and get a few more quarters of those sweet App Store profits. Whether it's a bad strategy to wait until the very last time to comply is still to be seen.

Still, a very interesting read I'll keep to the back of my mind.