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European regulators want to disrupt Silicon Valley's quest for global market domination. The EU has relentlessly investigated U.S. tech giants individually, saying they have rigged the game against their European competitors. But now the European Commission is officially moving to limit Silicon Valley's overall sway in the EU marketplace.
Its plan could fall short, though – and even if it works, there are some attractive global tech giants that will remain good prospects.
The EC said on Thursday that it will standardize regulations across all 28 national markets and ramp-up anti-trust investigations to target more e-commerce giants such as Amazon (NASDAQ: AMZN).
Its new 16-point plan will unify and revise rules to make it easier for Europeans to buy and sell goods online regardless of their home state. It will also make it easier to pursue antitrust cases, and to examine whether dominant tech companies in the U.S. have unfairly hampered the growth of entrepreneurial European tech companies.
U.S. tech companies claim the plan will inhibit innovation in Europe. Proponents of the plan have responded that Silicon Valley cannot continue to cite the vague concept of "innovation" as an excuse to engage in unfair practices and to shirk regulations.
Whether the intentions of the European Commission are to give European tech companies a leg up, or to truly create a level playing field, its efforts – as sweeping as they are – might not be enough.
As Money Morning reported last month, the massive, proprietary data sets that give tech giants their competitive advantage have an innately monopolizing effect that is unlikely to be curtailed by changing a few rules.
This means that companies like Google (NASDAQ: GOOG), Facebook (NASDAQ: FB), eBay (NASDAQ: EBAY), and Amazon, which thrive on proprietary access to client data, are unlikely to be hurt much unless EU regulators crack down more harshly.
In the short term however, the company that may be best positioned to benefit from the new scrutiny of Silicon Valley is Alibaba Group Holding (NYSE: BABA), which competes with U.S. tech giants like Amazon, but is not currently in EU regulators' sights. Alibaba rose on Thursday on positive earnings news and the introduction of a new CEO.