HEIN PHOTOGRAPHY Fearless: one of Vestager’s first moves as commissioner was to order Apple to pay €13bn in tax in 2016

24 | NEW STATESMAN | 12-18 JANUARY 2018 THE NS PROFILE The woman who tamed Once dubbed “the worst politician in ”, Margrethe Vestager is now the EU commissioner whose mission is to hold , Apple, and to account. How far can she go? By Xan Rice

n the last day of November 2017, minister. Vestager, who is 49, shared the up,” she told me when we met in her tenth- the snow fell in Brussels. By the stage with Macron both times. floor office in the Berlaymont, the vast evening, a crust of white had Vestager (pronounced Vest-ayer) was cruciform headquarters of the European settled on the crown of Godfrey little known outside her native Denmark Commission in Brussels. “It’s not to serve of Bouillon, the 11th-century when she became Europe’s commissioner the purpose of the company; it’s to serve crusader O whose statue dominates the Place for competition three years ago. The EU the purpose of avoiding tax.” Royale. Not far away, people filed into a was already investigating tech companies Seven months after meeting Cook, Ves­ concert hall at the Palais des Beaux-Arts, including Google and Apple for abusing tager ordered to recover €13bn from renowned for hosting great conductor- their dominant market positions or their tax Apple, ruling that the government had composers such as Stravinsky and Rach- structures. But Vestager, who is eloquent, granted tax benefits to the company that maninov. However, they were not there charming (she smiles a lot) and supremely broke the EU’s rules on state aid. Cook to listen to music; they had come to hear confident in her convictions, quickly con- denounced the decision as “total politi- Margrethe Vestager, the EU commissioner cluded that more decisive action was needed. cal crap”. The US government agreed. So who has been called the “most powerful In January 2016, she hosted Apple’s chief did the Irish authorities. Yet it was hard to woman in Europe” and whose mission is executive, Tim Cook, in her Brussels office believe that Apple, whose revenues for its to hold to account the world’s biggest to discuss concerns about the company’s most recent financial year were $229bn, technology companies. tax affairs in Ireland, where it had sub­ did not have it coming. It is possible to ad- Since 2014, the arts centre has hosted an sidiaries that handled its sales outside the mire the iPhone – Vestager likes hers – and annual series of debates about the future of Americas. Cook reportedly tried to lecture also agree that an arrangement enabling the the EU. These have been notable both for the commissioner and talked over her re- world’s most valuable company to pay a reflecting the sense of crisis on the conti- peatedly. Neither the tone nor the message tax rate that was, in effect, as low as 0.005 nent – the themes have been “Reinventing were appreciated by Vestager, who has said per cent on its European sales in 2014 was Europe”, “Now or Never”, “Last Chance” that “some of the rich and the powerful” of non-political crap. (Apple, which pays most and “The End of Europe?” – and for the the world are playing the public “for fools” of its tax in the US, handed over $11.6bn, quality of the speakers, one of whom was when it comes to tax. or 18.1 per cent of its total profits, to the Emmanuel Macron, who appeared in 2014 “There’s no economic rationale behind tax authorities worldwide in the year to

and 2016, while he was France’s economy the way some of these companies are set 30 September 2017.) t

12-18 JANUARY 2018 | NEW STATESMAN | 25 t Vestager was just getting started. In be big, and you can be successful,” she said, Two years later, it was polling at 3 per cent. May 2017, she fined Facebook, which has “but you cannot abuse your power to stop There was talk that she was killing the party. more than two billion unique users and is others from challenging you from being the Henrik Kjerrumgaard, its head of commu- the world’s most popular social network, next big thing in five or ten years.” nications at the time, told me that Vestager’s €110m for misleading regulators during children were asking her: “Is it true that its purchase of WhatsApp. In October, it ompetition law can be dry and you’re the worst politician in Denmark?” was Amazon – not only the West’s largest dull, and so can the commission- He recalls a turning point in the summer of e-commerce site but also the world’s big- ers. Vestager, who was born near 2009. At the party headquarters, everyone gest cloud computing company and speak- Copenhagen in 1968, is not. One was in a grim mood. But Vestager arrived for er brand – in the crosshairs, instructed to lawyer in Brussels even designed work one day in high spirits. Kjerrumgaard pay €250m to Luxembourg for the illegal Ca trivia quiz for her staff based on Vestag- asked her why she was so happy. “She said, tax benefits it received there. The biggest er’s backstory and habits. What animal ‘I have figured out that nobody asked me to penalty was reserved for Google, whose toys does she knit as gifts for colleagues? be here. If I want to take my carpet and roll founding motto was “Don’t be evil”. Elephants with big ears to remind them it up and leave politics, I can do that. It also Vestager decided it had been just that, to listen. What does she like to bake? means: if I am strong, I can do what I want to do. Being a leader is saying we move in a spe- cific direction and I am going to do that.’” She has achieved that rare feat – Vestager’s new approach meant talking to everybody yet sticking strongly to her inspiring some admiration for beliefs: she is pro-immigration, pro-gay marriage and pro-Europe, but also fiscally the conservative. It worked. In the 2011 election, the party won 9.5 per cent of the vote, its highest share for nearly 40 years. Vestager hitting it with a record €2.4bn fine for Cinnamon buns. What hit Danish TV show agreed to form a coalition government with abusing its dominant position in the search used her as a model for the lead character? the Social Democrats and the Socialist Peo- market at the expense of smaller rivals. Borgen. What does she have in common ple’s Party, but only after securing for her- Not everyone agrees that all the penalties with Theresa May and Angela Merkel? self the interior and economy portfolios. were merited, or that the rulings were Their fathers were all clergymen. Her insistence on cutting welfare pay- strictly in accordance with competition law. Vestager’s mother was a clergywoman, ments led to a clash with trade unions. One The Economist has suggested that Vestager too, and the pair of Lutheran pastors minis- sent Vestager a fist with a raised middle has been making decisions to advance her tered to the people of Ølgod, a village on the digit, cast in white plaster, which she kept career. Nevertheless, by holding some of the windswept flatlands of western Denmark. and christened the “Fuck Finger”. Other world’s largest companies to account and Their door was always open. Vestager re- parts of the job were more enjoyable. In shaming member states into administering members waking up as a child to the sound the first half of 2012, Denmark held the EU corporation tax more fairly, she has achieved of a car pulling up outside and an exhausted presidency; Vestager led meetings, in Brus- that rare feat – inspiring some admiration father coming in with the paperwork for a sels, of the Economic and Financial Affairs for the European Commission. newly arrived child. Sometimes the phone Council (Ecofin), comprised of finance “People look at her and think: hey, would ring late at night, requesting her par- ministers across the trading bloc. “We had maybe the commission is worth having,” ents to come out because something terrible a lot to do, because it was in the aftermath said Thomas Vinje, a partner at the law had happened. of the financial crisis, so there was a lot of firm Clifford Chance in Brussels, who has “Ours was a never a religious religious legislation on the banking sector,” Vestager represented US clients on both sides of home, because my parents thought of reli- said. Even after her term as Ecofin president Vestager’s decisions. “She communicates gion as something you do: it’s the way you ended, she never skipped a meeting. “If you far better than any other commissioner I engage in the local community,” Vestager want to be part of the discussion, you have have seen.” told me. “That has meant a lot to me.” to be there… I really liked it.” Those skills and her political nous were At school and at the University of Co- When the then Danish prime minister, on display when Vestager – a striking penhagen, where she studied econom- Helle Thorning-Schmidt, who was leader figure of over 6ft tall with close-cropped ics, Vestager engaged in student politics of the Social Democrats and is married to dark hair – stepped on to the stage for the but never intended to pursue it as a career. the Labour MP Stephen Kinnock, needed to debate at the Palais des Beaux-Arts. The When she was 21, she was contacted by of- nominate someone to the European Com- theme was “Europe: Yes We Can!”, sup- ficials seeking parliamentary candidates for mission in 2014, Vestager was the choice. posedly reflecting the changed mood on Radikale (Social ), a small, the continent in the aftermath of the Brexit centre-left party co-founded by her ma- ach member of the EU has one vote. This optimism was merited, Vestager ternal great-great-grandfather. She agreed commissioner, with portfolios said. Economic growth in the EU was up, to stand, knowing that she would not win that are similar to that of a na- unemployment down, and but eager to see if she could “tell a coherent tional government minister, such and Brexit had brought the other 27 mem- story about what I believed in”. as trade, or transport. Commis- ber states closer together. Asked to name She became the party chairwoman soon Esioners spend much of their time trying her favourite Belgian beer, she noted that after and was appointed minister for edu- to convince their colleagues and govern- the country had more than a thousand cation and ecclesiastical affairs in 1998, but ments of the merits of their proposed beers – but dodged the question. And no, Radikale Venstre was struggling when she policies. The competition commissioner the competition commission was not un- was made leader in 2007. In the election has a great deal more autonomy than the fair towards large tech companies. “You can that year, it won just 5.1 per cent of the vote. others. She has both investigative and

26 | NEW STATESMAN | 12-18 JANUARY 2018 Margrethe Vestager (r) in 2012 with the former Danish PM Helle Thorning-Schmidt and (l) of the Socialist People’s Party

eldest daughter is on a “sort of digital de- tox”. “She says it disables her ability to con- centrate. Also, when you’re with other peo- ple, you should be with other people and not with someone by your phone. And I like that very much.” Vestager says she is a “tech optimist” – she is active on Twitter, with 230,000 fol- lowers, and has two smartphones. Yet she is also a “curious user”, and experiments with different services, such as the DuckDuckGo search engine, which does not track its us- ers. “Back in the day, everyone was talking about cookies. Now this is so old-school, and everyone is talking about tracking, how to deal with it, what comes out of it. It’s very interesting.” Few technology companies are better at tracking users than Google, whose share of internet searches exceeds 90 per cent in decision-making powers: in effect, she is increasing concentration in almost every most EU countries, and whose business the judge, jury and executioner. sector, the consumer feels smaller and practices have sparked several investiga- “The competition commission is seen as smaller because the businesses they deal tions by the commission. The most promi- the crown jewel of the European Commis- with become bigger and bigger,” she said. nent of these related to Google’s “shop- sion’s work,” said Peter Guilford, a previous “And you have digitalisation, which makes ping” service, which competitors in the competition spokesman who is the chair- people feel increasingly less in control of US and Europe said unfairly discriminated man of GPLUS, a public affairs firm in Brus- their data, of who they are dealing with, against them. When you search Google for sels, when we met for coffee. “All the best what happens when they have done their a product, the company’s own price com- officials want to go there and the other com- deals. I think antitrust and competition law parison results appear at the top of the page, missioners tend to rally around the person. enforcement can play a role to say, ‘Well, we before the search results. Rival price com- They don’t have all the crap that other com- are actually watching to empower you still parison services, meanwhile, were demot- missioners have to deal with.” to be a consumer with buying power.’” ed well down the list of results, according to Vestager arrived in Brussels determined Part of Vestager’s job is to smash cartels, the complainants. to stamp her style on the job. She rede- such as the car parts manufacturers who The commission agreed that Google had signed the commissioner’s office to make colluded to maximise profits in the EU and abused its dominant position and sought it more like a living room, with carpets on have been fined €1.6bn, and to approve or unsuccessfully to reach a settlement with the light-wood floor, a blue-grey sofa and block mergers. But the 900 staff under Ve- the company. When Vestager took over the coffee table, and modern artwork and cloth stager have spent much more time looking case, in 2014, she poured additional resourc- butterflies made by Tibetan orphans on the at the technology sector than under previ- es into the investigation before slapping the walls. Next to her desk there is a symbolic ous commissioners. company with the €2.4bn fine. Google is wooden stepladder: “A woman who wants IT companies have always attracted appealing the decision. “Of course it would to go places needs to bring her own ladder,” scrutiny because of their potential to have been better if this case had been solved she has said. Numerous photos of her fam- dominate a particular sector. In 2004, the EU fast, because then everyone could move ily – her husband, Thomas, a maths teacher, fined Microsoft €497m for anti-competitive on,” she said. “Now, that was not doable, and their three daughters, aged 14, 18 and 21 behaviour and, five years later, hit Intel with so we had to find another direction.” – sit on top of a low filing cabinet. a €1.06bn penalty, then the largest ever. But Writing in the Harvard Business Review Jens Thomsen, who wrote a book about at that point Big Tech was only Medium this summer, Bala Iyer, Mohan Subrama- Vestager’s first 100 days as commissioner, Tech. The five largest global companies in niam and U Srinivasa Rangan argued that told me that she chose the narrow meeting March 2009 were ExxonMobil, PetroChina, competition law needs to be updated for table that bisects the room so she would be Walmart, the Industrial and Commercial the digital age. Tomorrow’s monopolies close to her guests when they sat opposite Bank of China and China Mobile, according would not be judged only in terms of how her. Rather than sending an aide to escort to the consulting firm PwC. Today, they much they sell, they wrote, but also how visitors from the waiting room to her office, are Apple, Alphabet (the parent of Google), much they know about us and how much Vestager collects them in person, as she did Microsoft, Amazon and Facebook. It is not better they can predict our behaviour than with me. “She’s very shrewd – more than only the size of the tech giants that concerns their competitors. she may appear,” Thomsen said. regulators. “They are shaping our societies,” Vestager agrees. “This is a way of saying After we sat down at the narrow table, I said Vestager, “so that’s one of the reasons that data becomes an asset. There’s no such asked Vestager what she considered to be it’s a priority to look at digital issues.” thing as a free search or anything like that, so the main purpose of the competition com- Vestager has witnessed a backlash against obviously you pay, and your payment then

BAX LINDHARDT/EPA mission. “In these years where you have technology firms in her own family. Her becomes an asset… We look very closely t

12-18 JANUARY 2018 | NEW STATESMAN | 27 t at these issues. We haven’t had a big data and the way that Vestager is standing up to unfairly blocks competitors from advertis- case yet… but we try to look very carefully.” the technology companies. “On the other ing on third-party websites. hand, it’s also true that Germany sees the Speculation over Vestager’s next move airness is a word that Vestager commission as a vehicle to protect its own is mounting, and although she can serve often uses, especially where it digital industries. So how much of this a second term, it’s clear that her interests pertains to tax. Under EU law, a is principle, and how much is to protect and, seemingly, her ambition, extend be- government can set its tax rate as local industries?” yond competition. She was animated talk- low as it likes so long as it’s the Andrea Renda, the head of regulatory ing about Brexit. “None of us took it for Fsame for all companies. But approving tax policy at the Centre for European Policy granted that it would be Remain, yet when schemes that only benefit certain corpora- Studies in Brussels, also had a nuanced view [the Leave victory] happened, it was awful, tions – usually a multinational corporation of Vestager’s achievements. “Consumers because… we really have been doing our that the country is trying to woo – is illegal will say, ‘I trust her, she’s strong,’ and the best to accommodate the interests of the under EU “state aid” regulations. general view of her is positive. Mine is a bit Brits in European democracy. So it was an The largest, most egregious state aid avalanche of cold water, not just a bucket. cases have involved technology companies “But then, it’s always good advice from – Apple and Amazon. Yet other global firms It has been suggested your mother: sleep on it, the next day things have also been caught out. In 2015, Vestager that she could be the look different… We’re 27 [member states], ruled that the Netherlands and Luxembourg and we have something going for us, and had granted selective advantages to Star- next EC president we have citizens who expect us to make it bucks and Fiat respectively, and ordered the work: handling illegal immigration, pro- companies each to pay between €20m and more mixed, because she lacks transpar- tecting refugees, handling climate change, €30m in back taxes. A few months later, she ency. She needs to explain more in terms of enabling jobs to be created. Let’s move on.” instructed Belgium to recover €700m from competition law why she is doing things.” There has been talk that she could suc- 35 multinationals. McDonalds, Ikea and the Irrespective of the strict merits of the cas- ceed Christine Lagarde as head of the In- French energy company Engie are also un- es, Vestager has won praise and respect for ternational Monetary Fund. In Brussels, der investigation over their tax affairs. advancing the debate about how to regulate however, it is the suggestion that she may The UK has not escaped scrutiny. Last technology companies in the 21st century. follow Jean-Claude Juncker as president of autumn, Vestager announced that she “Digital penetration of markets and our the European Commission when he stands was looking into a government-approved lives gets greater every day,” said Georgios down next year that has got people excited. scheme called “group financing exemption” Petropoulos, a fellow at the Bruegel eco- reported in November that that might allow multinationals to avoid tax. nomics think tank in Brussels. “We have to Emmanuel Macron had told officials that “Everyone is talking about the small and establish some red lines about behaviour.” Vestager was his choice for the commission’s medium-size businesses being the back- Vestager’s term has nearly two years left top job. They are mutual admirers. When I bone of the European economy. Well, to run. One of her biggest ongoing inves- asked Vestager about the French president, they’re also the backbone of public budg- tigations relates to , the Russian she said: “I think everyone who has met ets, because it’s the smaller companies who energy giant that supplies about a third of him would say he is amazing. Not only pay their taxes, it is small earners who pay the EU’s gas – Germany is the biggest buyer for his education, but the way he engages their taxes,” Vestager said. “I think it is un- – and that stands accused of overcharging with people.” fair that many contribute, but not all are and restricting its customers’ ability to sell The EC presidency may be a long shot. contributing, because everyone is benefiting gas across borders. Denmark is not in the eurozone, and from what makes a decent society: roads, Other large cases currently under way in- Vestager is part of the Liberal politi- digital infrastructure, health system, educa- volve Google, again. Competition officials cal group in Brussels, only the fourth- tion. And none of these come for free.” are investigating whether its Android mo- biggest alliance. Her decision to bile operating system has built-in monop- investigate the tax breaks granted by gov- owards the end of my interview olies, and whether the AdSense program ernments to multinationals may also have with Vestager, I asked where created some ill will towards her. the “Fuck Finger” was. “Behind “Frankly, I think she would be great,” said you,” she said, pointing to the Alec Burnside, a competition partner at the coffee table. “It’s there so peo- law firm Dechert. “To take on these peo- Tple don’t have to see it, because most peo- ple and cases, to withstand the fury of the ple don’t like it – they don’t know where US tech industry and government: that’s to look. But it’s not for them, it’s for me. I a ballsy thing – if that’s the right term – need to be reminded that there will always to have done.” be someone who disagrees with me, and Margrethe Vestager has not confirmed that is their right, and sometimes they will an interest in the presidency – but neither be correct.” The big tech companies she has has she denied it. On the stage at the Palais penalised believe that they will eventually des Beaux-Arts on 30 November, her in- be proved correct in court, and some legal terviewer remarked that a local newspaper experts in Brussels agree. “With state aid, had a story that day suggesting that she may she’s stretched the law and it’s quite possi- be the next president of the EC. Vestager ble she will lose,” one lawyer told me. smiled. “I have learned that European poli- Charles Grant, the director of the Cen- tics is very much like Danish politics,” she tre for European Reform in London, said “He’s trying to build said. “You have all the rumours.” l

GRIZELDA.NET that he supported the EU’s tax crackdown political consensus.” Xan Rice is the features editor of the NS

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