Analysis: the 'Brussels effect' means lawmakers representing Europe's 400
million people often end up deciding standards for rest of the world.
Have you ever borrowed a friend's charger only to find it is not compatible
with your phone? Or wondered what to do with the pile of cables you've
accumulated from every device you've ever bought?
Such inconveniences will soon be history after the EU mandated that all
small and medium-sized portable devices must be equipped with a USB-C
charging port by autumn 2024. Laptops are due to come under the new rule
roughly in autumn 2027.
Apple unveiled its new iPhone lineup yesterday, with its Lightning charger
ports replaced on the newest models by a universal USB-C charger.
Unbundling will also be mandatory:
chargers will no longer come with new phones, but will be purchased
separately, if needed, when you buy a new phone. According to the EU's
announcement:
"This law is a part of a broader EU effort to make products in the EU more
sustainable, to reduce electronic waste, and make consumers' lives easier."
The European Commission first announced it was discussing the need for a
common charger with the industry in 2009, so many manufacturers have already
aligned their production with the new rule. As a result, more than 30
different models of charger have now been reduced to only three: the new
standard USB-C, the mini-USB, and Apple's Lightning charger.
A common charger should be less wasteful and cheaper, as well as making
consumers' lives easier what could possibly be wrong with that? According
to Apple, a lot. The tech company has criticised the plan to standardise,
arguing the regulation may hinder future innovation.
But the new rules mean it has been forced to add USB-C charging capabilities
to its next generation of phones anyway. This shows the power of the EU to
affect the development of markets and industries beyond its borders.
Consumers have benefited from improvements to charging technology over the
years, but the concern is that a common charger requirement could stifle
innovation by making it impossible to develop and roll out even better
versions. Imagine if regulators had forced the installation of a CD player
on laptops or even a headphone jack on mobile phones, for example. A study
commissioned by Apple estimates the potential loss of value to consumers
from blocking innovation in this area to be in the billions.
The Commission argues that the legislation is flexible enough to allow for
innovation. It even explicitly seeks a common standard for wireless charging
as soon as the technology is mature enough.
This standard could be adopted by 2026, with the only constraint being that
the future wireless standard is the same for all companies.
Finding a common standard is often in the interest of manufacturers. Along
with helping to reduce costs, it offers the ability to compete on a level
playing field. The prospect of a future common standard also encourages
competition to provide the resulting product. This often results in
manufacturers cooperating without government interventions, both at the
national and international levels.
Indeed, USB is already a collaborative venture founded by major tech players
such as Microsoft, HP and even Apple. The difference with Apple's Lightning
chargers, however, is precisely that the technology is not collaborative and
it's proprietary. Anyone can add a USB port to an electronic device, but
only Apple products can use its lightning ports.
Economists call this a "pesky little brother" situation. Apple is by far the
largest technology company in the world.
While everyone would like their product to be compatible with Apple, it
wants exclusivity. Thus, the main risk of the new regulation may not be to
hinder innovation in general, but to block new exclusive Apple designs.
As such, the EU has chosen the collective gain of a common standard versus
the benefit some consumers may derive from the exclusivity of Apple
products.
Other regulators might care more about not hurting Apple's profits, but the
EU seems to believe that this point is irrelevant to the welfare of European
citizens.
On the other hand, the EU's decision to standardise chargers is likely to
have global implications. Once tech manufacturers switch to offer the common
charger for European customers, it could be costly to produce a different
technology for other parts of the world.
Once a product is compliant with EU regulation, firms often choose not to
make a different version for the rest of the world. EU rules on health and
safety, recycling, or chemical products often force global manufacturers to
change their practices everywhere, for example. And when a smaller player
such as the UK insists on having its own certification, it merely becomes a
costly bureaucratic exercise of replication.
Take GDPR as an example. Since 2016, global websites have modified user
experience to abide by the European data protection law. Companies such as
Facebook and Google have adapted their business models to suit the new
standards stemming from the EU Digital Market Act, drastically reducing the
ways they can make money from consumer data.
Companies are not obliged to apply EU law globally, they often simply find
it easier to do so.
Known as the "Brussels effect", this means lawmakers representing Europe's
400 million people often end up deciding the standards for the rest of the
world. Standardisation and regulation decisions are typically taken after an
analysis of the cost and benefits of different options. In the case of GDPR,
some studies estimate the innovation cost of privacy to be significant.
While US lawmakers think this cost is higher than the benefits, their
preference has become largely irrelevant. The biggest technological
companies are based in the US but their regulation has been delegated to the
EU in practice, simply because its regulators acted first.
In the case of the common charger, the direct risk to innovation is probably
minimal and consumers should be fairly happy with the new rules. The
underlying issue is actually democratic: standards are often set by the
regulators that act first. Others must then watch markets develop from the
sidelines.
Renaud Foucart is a Senior Lecturer in Economics at Lancaster University
Management School at Lancaster University.
This article was originally published by The Conversation.
RTÉ Technology.
