Asserting Europe's technological sovereignty amid American platform finance: Countering financial sector dependence on Big Tech?

David Bassens; Reijer Pieter Hendrikse

doi:10.1016/j.polgeo.2022.102648

Asserting Europe's technological sovereignty amid American platform finance: Countering financial sector dependence on Big Tech?

David Bassens, Reijer Pieter Hendrikse

Geography

Research output: Contribution to journal › Article › peer-review

29 Citations (Scopus)

Abstract

Spearheaded by major technology companies (Big Tech), digital platforms have rapidly become key infrastructures for accumulation under global financialized capitalism, with consumer convenience and underlying practices of data collection, control and analysis giving rise to platform finance. While financial institutions are partnering with financial technology (FinTech) start-ups to digitally enclose customers, American and Chinese Big Techs increasingly mobilize their platforms to offer payment services, next to expanding their platformed services to financial incumbents. Observing the growing dependence of finance on American Big Tech platforms, this paper investigates how the shift toward platform finance in the European Union (EU) unfolds as a state-mediated and power-laden process between mostly ‘domestic’ (EU) financial incumbents and ‘foreign’ (non-EU) Big Tech firms. The starting point of the analysis is the European Strategy for Data launched by the European Commission in 2020. Through document analysis, we reconstruct the circulation of code words within ‘the Brussels Bubble’ in anticipation of- and in direct response to the proposal. We find that, despite its implication in the global financial crisis, incumbent EU finance presents itself as a fix for non-EU platform domination by Big Tech. The ‘technological sovereignty’ of the EU is marshalled by incumbent finance to defend market share as would-be pan-European digital financial champions. The Big Tech ‘threat’ is thereby transformed into an argument for strategic deregulation and forced data sharing by Big Tech for the sake of maintaining a ‘level playing field’. The outcome of these processes of strategic coupling is an alignment between the interests of EU data protection and the commercial interests of platformizing European banks.

Original language	English
Article number	102648
Pages (from-to)	1-10
Number of pages	10
Journal	Political Geography
Volume	97
DOIs	https://doi.org/10.1016/j.polgeo.2022.102648
Publication status	Published - Aug 2022

Bibliographical note

Funding Information:
This work was supported by the Research Foundation – Flanders [grant number G004920N ].

Funding Information:
The FSAP constituted an important step since this was the first concerted action to complete a Single Market in financial services. A key introduction was the single passport/home country control principle that made that financial institutions were under the regulatory control of the country of registration and were subsequently allowed to provide services throughout the wider Single Market (European Commission, 1999). In anticipation of the Euro the 1990s indeed saw European banks gearing up for cross-border activities (van Meeteren & Bassens, 2018) that started to materialize after its introduction – a process that was put in reverse with the outbreak of the 2007–08 financial crisis and its Eurozone aftermath (Bassens et al., 2013; Engelen et al., 2011). The Eurozone crisis provided another incentive to deepen financial integration on the continent in the spirit of failing forward (Jones et al., 2016) with regulatory and policy flaws triggering more policies as a result. The post-crisis conjuncture rather rapidly saw a desired return to normal with all eyes focused on the Banking Union (BU) and Capital Markets Union (CMU). While the BU seeks to integrate financial supervision, the CMU is much more proactive as it seeks to take away barriers impeding the flow of capital between member states. In practice, CMU revolves around rehabilitating high-risk practices such as securitization to kick-start economic growth (Engelen & Glasmacher, 2018) and a reduction of prudential rules and various forms of incentivizing financial products with public funds (Haerter, 2020).It would appear then that financial industry concerns of non-reciprocal data sharing between Big Fin and Big Tech, looming platform control, and the subsequent risk of market power in the hands of Big Tech have substantially shaped the European Strategy for Data. The voice of Big Tech, in turn, resounds less clearly in the discursive space prior to the inception of the European Strategy for Data. Amongst a variety of tech-sponsored industry associations and think tanks, DIGITALEUROPE arguably is the main Tech industry representation in Brussels captained by the MAMAAs, yet they hardly took an official stance prior to the launch of the EU strategy – a stark contrast with its output of position papers after the launch. The immediate response by DIGITALEUROPE suggests that the announced EU strategy was not exactly well-received by Big Tech:This work was supported by the Research Foundation – Flanders [grant number G004920N]. An earlier version of this paper was presented at the ‘Evolving Geographies of FinTech’ workshop, organized by the Global Network on Financial Geography on 25–26 November 2020. We thank three anonymous referees and the editor for their valuable comments on earlier versions of the paper. Both authors share equal responsibility for any remaining errors.

Publisher Copyright:
© 2022 Elsevier Ltd

Copyright:
Copyright 2022 Elsevier B.V., All rights reserved.

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@article{c7469cb5bff945d78626e1558f5b8bfa,

title = "Asserting Europe's technological sovereignty amid American platform finance: Countering financial sector dependence on Big Tech?",

abstract = "Spearheaded by major technology companies (Big Tech), digital platforms have rapidly become key infrastructures for accumulation under global financialized capitalism, with consumer convenience and underlying practices of data collection, control and analysis giving rise to platform finance. While financial institutions are partnering with financial technology (FinTech) start-ups to digitally enclose customers, American and Chinese Big Techs increasingly mobilize their platforms to offer payment services, next to expanding their platformed services to financial incumbents. Observing the growing dependence of finance on American Big Tech platforms, this paper investigates how the shift toward platform finance in the European Union (EU) unfolds as a state-mediated and power-laden process between mostly {\textquoteleft}domestic{\textquoteright} (EU) financial incumbents and {\textquoteleft}foreign{\textquoteright} (non-EU) Big Tech firms. The starting point of the analysis is the European Strategy for Data launched by the European Commission in 2020. Through document analysis, we reconstruct the circulation of code words within {\textquoteleft}the Brussels Bubble{\textquoteright} in anticipation of- and in direct response to the proposal. We find that, despite its implication in the global financial crisis, incumbent EU finance presents itself as a fix for non-EU platform domination by Big Tech. The {\textquoteleft}technological sovereignty{\textquoteright} of the EU is marshalled by incumbent finance to defend market share as would-be pan-European digital financial champions. The Big Tech {\textquoteleft}threat{\textquoteright} is thereby transformed into an argument for strategic deregulation and forced data sharing by Big Tech for the sake of maintaining a {\textquoteleft}level playing field{\textquoteright}. The outcome of these processes of strategic coupling is an alignment between the interests of EU data protection and the commercial interests of platformizing European banks.",

author = "David Bassens and Hendrikse, {Reijer Pieter}",

note = "Funding Information: This work was supported by the Research Foundation – Flanders [grant number G004920N ]. Funding Information: The FSAP constituted an important step since this was the first concerted action to complete a Single Market in financial services. A key introduction was the single passport/home country control principle that made that financial institutions were under the regulatory control of the country of registration and were subsequently allowed to provide services throughout the wider Single Market (European Commission, 1999). In anticipation of the Euro the 1990s indeed saw European banks gearing up for cross-border activities (van Meeteren & Bassens, 2018) that started to materialize after its introduction – a process that was put in reverse with the outbreak of the 2007–08 financial crisis and its Eurozone aftermath (Bassens et al., 2013; Engelen et al., 2011). The Eurozone crisis provided another incentive to deepen financial integration on the continent in the spirit of failing forward (Jones et al., 2016) with regulatory and policy flaws triggering more policies as a result. The post-crisis conjuncture rather rapidly saw a desired return to normal with all eyes focused on the Banking Union (BU) and Capital Markets Union (CMU). While the BU seeks to integrate financial supervision, the CMU is much more proactive as it seeks to take away barriers impeding the flow of capital between member states. In practice, CMU revolves around rehabilitating high-risk practices such as securitization to kick-start economic growth (Engelen & Glasmacher, 2018) and a reduction of prudential rules and various forms of incentivizing financial products with public funds (Haerter, 2020).It would appear then that financial industry concerns of non-reciprocal data sharing between Big Fin and Big Tech, looming platform control, and the subsequent risk of market power in the hands of Big Tech have substantially shaped the European Strategy for Data. The voice of Big Tech, in turn, resounds less clearly in the discursive space prior to the inception of the European Strategy for Data. Amongst a variety of tech-sponsored industry associations and think tanks, DIGITALEUROPE arguably is the main Tech industry representation in Brussels captained by the MAMAAs, yet they hardly took an official stance prior to the launch of the EU strategy – a stark contrast with its output of position papers after the launch. The immediate response by DIGITALEUROPE suggests that the announced EU strategy was not exactly well-received by Big Tech:This work was supported by the Research Foundation – Flanders [grant number G004920N]. An earlier version of this paper was presented at the {\textquoteleft}Evolving Geographies of FinTech{\textquoteright} workshop, organized by the Global Network on Financial Geography on 25–26 November 2020. We thank three anonymous referees and the editor for their valuable comments on earlier versions of the paper. Both authors share equal responsibility for any remaining errors. Publisher Copyright: {\textcopyright} 2022 Elsevier Ltd Copyright: Copyright 2022 Elsevier B.V., All rights reserved.",

year = "2022",

month = aug,

doi = "10.1016/j.polgeo.2022.102648",

language = "English",

volume = "97",

pages = "1--10",

journal = "Political Geography",

issn = "0962-6298",

publisher = "Elsevier BV",

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T1 - Asserting Europe's technological sovereignty amid American platform finance

T2 - Countering financial sector dependence on Big Tech?

AU - Bassens, David

AU - Hendrikse, Reijer Pieter

N1 - Funding Information: This work was supported by the Research Foundation – Flanders [grant number G004920N ]. Funding Information: The FSAP constituted an important step since this was the first concerted action to complete a Single Market in financial services. A key introduction was the single passport/home country control principle that made that financial institutions were under the regulatory control of the country of registration and were subsequently allowed to provide services throughout the wider Single Market (European Commission, 1999). In anticipation of the Euro the 1990s indeed saw European banks gearing up for cross-border activities (van Meeteren & Bassens, 2018) that started to materialize after its introduction – a process that was put in reverse with the outbreak of the 2007–08 financial crisis and its Eurozone aftermath (Bassens et al., 2013; Engelen et al., 2011). The Eurozone crisis provided another incentive to deepen financial integration on the continent in the spirit of failing forward (Jones et al., 2016) with regulatory and policy flaws triggering more policies as a result. The post-crisis conjuncture rather rapidly saw a desired return to normal with all eyes focused on the Banking Union (BU) and Capital Markets Union (CMU). While the BU seeks to integrate financial supervision, the CMU is much more proactive as it seeks to take away barriers impeding the flow of capital between member states. In practice, CMU revolves around rehabilitating high-risk practices such as securitization to kick-start economic growth (Engelen & Glasmacher, 2018) and a reduction of prudential rules and various forms of incentivizing financial products with public funds (Haerter, 2020).It would appear then that financial industry concerns of non-reciprocal data sharing between Big Fin and Big Tech, looming platform control, and the subsequent risk of market power in the hands of Big Tech have substantially shaped the European Strategy for Data. The voice of Big Tech, in turn, resounds less clearly in the discursive space prior to the inception of the European Strategy for Data. Amongst a variety of tech-sponsored industry associations and think tanks, DIGITALEUROPE arguably is the main Tech industry representation in Brussels captained by the MAMAAs, yet they hardly took an official stance prior to the launch of the EU strategy – a stark contrast with its output of position papers after the launch. The immediate response by DIGITALEUROPE suggests that the announced EU strategy was not exactly well-received by Big Tech:This work was supported by the Research Foundation – Flanders [grant number G004920N]. An earlier version of this paper was presented at the ‘Evolving Geographies of FinTech’ workshop, organized by the Global Network on Financial Geography on 25–26 November 2020. We thank three anonymous referees and the editor for their valuable comments on earlier versions of the paper. Both authors share equal responsibility for any remaining errors. Publisher Copyright: © 2022 Elsevier Ltd Copyright: Copyright 2022 Elsevier B.V., All rights reserved.

PY - 2022/8

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N2 - Spearheaded by major technology companies (Big Tech), digital platforms have rapidly become key infrastructures for accumulation under global financialized capitalism, with consumer convenience and underlying practices of data collection, control and analysis giving rise to platform finance. While financial institutions are partnering with financial technology (FinTech) start-ups to digitally enclose customers, American and Chinese Big Techs increasingly mobilize their platforms to offer payment services, next to expanding their platformed services to financial incumbents. Observing the growing dependence of finance on American Big Tech platforms, this paper investigates how the shift toward platform finance in the European Union (EU) unfolds as a state-mediated and power-laden process between mostly ‘domestic’ (EU) financial incumbents and ‘foreign’ (non-EU) Big Tech firms. The starting point of the analysis is the European Strategy for Data launched by the European Commission in 2020. Through document analysis, we reconstruct the circulation of code words within ‘the Brussels Bubble’ in anticipation of- and in direct response to the proposal. We find that, despite its implication in the global financial crisis, incumbent EU finance presents itself as a fix for non-EU platform domination by Big Tech. The ‘technological sovereignty’ of the EU is marshalled by incumbent finance to defend market share as would-be pan-European digital financial champions. The Big Tech ‘threat’ is thereby transformed into an argument for strategic deregulation and forced data sharing by Big Tech for the sake of maintaining a ‘level playing field’. The outcome of these processes of strategic coupling is an alignment between the interests of EU data protection and the commercial interests of platformizing European banks.

AB - Spearheaded by major technology companies (Big Tech), digital platforms have rapidly become key infrastructures for accumulation under global financialized capitalism, with consumer convenience and underlying practices of data collection, control and analysis giving rise to platform finance. While financial institutions are partnering with financial technology (FinTech) start-ups to digitally enclose customers, American and Chinese Big Techs increasingly mobilize their platforms to offer payment services, next to expanding their platformed services to financial incumbents. Observing the growing dependence of finance on American Big Tech platforms, this paper investigates how the shift toward platform finance in the European Union (EU) unfolds as a state-mediated and power-laden process between mostly ‘domestic’ (EU) financial incumbents and ‘foreign’ (non-EU) Big Tech firms. The starting point of the analysis is the European Strategy for Data launched by the European Commission in 2020. Through document analysis, we reconstruct the circulation of code words within ‘the Brussels Bubble’ in anticipation of- and in direct response to the proposal. We find that, despite its implication in the global financial crisis, incumbent EU finance presents itself as a fix for non-EU platform domination by Big Tech. The ‘technological sovereignty’ of the EU is marshalled by incumbent finance to defend market share as would-be pan-European digital financial champions. The Big Tech ‘threat’ is thereby transformed into an argument for strategic deregulation and forced data sharing by Big Tech for the sake of maintaining a ‘level playing field’. The outcome of these processes of strategic coupling is an alignment between the interests of EU data protection and the commercial interests of platformizing European banks.

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JO - Political Geography

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M1 - 102648

ER -

Asserting Europe's technological sovereignty amid American platform finance: Countering financial sector dependence on Big Tech?

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