As US tech giants extend their global reach, fears are growing on their side of the Atlantic Ocean over trade barriers some see as “digital protectionism.”
While China has long been a difficult market for US firms to navigate, tensions have been rising with the EU on privacy, antitrust and other issues, impacting tech firms such as Google Inc, Facebook Inc and Uber Technologies Inc.
In recent weeks, Europe’s highest court struck down an agreement which allowed US firms to transfer personal data out of the region without running afoul of privacy rules. In parallel, Brussels is looking to create a new “digital single market” simplifying rules for operating across EU borders, but which could also include new regulations for online “platforms.”
Some see this as a jab at US retailers like Amazon.com Inc, “sharing economy” services like Airbnb Inc or even news outfits.
Computer and Communications Industry Association president Ed Black said the platform proposal “has the potential to be troublesome.”
“Nobody has defined what a platform is,” Black said. “It feels like a proposal to solve a non-problem.”
After the European Court of Justice invalidated the so-called “Safe Harbor” data-sharing agreement this month, US Secretary of Commerce Penny Pritzker said Washington was “deeply disappointed.”
For the past 15 years, the key transatlantic accord allowed tech firms like Facebook to operate on both sides of the ocean without running afoul of EU privacy laws.
The ruling, Pritzker said, “creates significant uncertainty for both US and EU companies and consumers, and puts at risk the thriving transatlantic digital economy.”
“We are waiting to see which way Europe goes,” Information Technology & Innovation Foundation vice president Daniel Castro said.
Castro detects “an undercurrent of fear” in Europe because of the popularity of services such as Google and Facebook, but said that the US and EU “need to be on the same side when it comes to free trade.”
Another source of friction is Europe’s effort to enforce the “right to be forgotten,” allowing individuals to remove online content from searches that are outdated or inaccurate.
France has ordered Google to carry this out worldwide, not just in Europe — but US firms see this as a form of censorship, effectively enabling people to rewrite history to hide embarrassing data.
“You are taking about Europe imposing its version of how the world should be on everyone else,” Castro said.
US President Barack Obama expressed concerns about digital trade barriers in an interview earlier this year with Re/code.
“We have owned the Internet. Our companies have created it, expanded it, perfected it in ways that [European firms] cannot compete,” Obama said in response to a question about European actions in the digital sphere. “Oftentimes, what is portrayed as high-minded positions on issues, sometimes is just designed to carve out some of their commercial interests.”
That view was echoed by Kati Suominen, who heads the Future of Trade initiative for the Center for Strategic and International Studies, a think tank.
Europe sees it is lagging and is moving on policies in order “to buy time,” she said.
“Europe is seeking to build its own digital economy by complicating the operations of foreign companies on European soil. In that sense, it is protectionism,” she said.
Rather than throw up new barriers, Europe should be tearing them down if it wishes to foster a digital economy — notably to enable better access to venture capital, she said.
EU Commissioner for the Digital Economy and Society Guenther Oettinger last month brushed aside suggestions of protectionism.
“Our rules on a European level are relevant for everybody, for European producers and players, for Asian players, and for American players as well,” he said during a visit to San Francisco.
While Google has been the target of a contentious EU antitrust probe, among other issues, Facebook has been especially impacted by privacy rules, with Ireland becoming the latest to examine the legality of its transfer of user data across the Atlantic.
Belgian officials have also sought to prevent Facebook from using a data “cookie” that gathers information about users. The social media giant said the tool helps verify legitimate accounts and combat spam.
A key element in the US-EU row over privacy has been the fear that US Internet firms are handing over data to the US National Security Agency, in light of revelations from former intelligence contractor Edward Snowden.
To address those concerns, US lawmakers have moved to pass a bill allowing non-citizens to enforce their data protection rights in US courts under the Privacy Act.
Berin Szoka, president of the Washington-based activist think tank TechFreedom, said the bill was a step toward “repairing America’s tarnished image on data privacy.”
He said that the failure until now to address the issue in Washington “has provoked an international crisis — one that could lead to a European blockade of American Internet companies.”
Suominen said that the US and EU have an chance to foster a flourishing digital economy — with appropriate rules — as part of the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated.
However, she said policymakers need to bring their thinking up to date.
“Policymakers are struggling to understand what these technologies are and what they can do, and we have archaic policies from the 20th century,” she said. “I worry that we are not on the right path for the 21st century.”
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