The European Commission has unveiled landmark regulations for the digital economy, setting yet another global standard.
The Digital Services Act (DSA) and the Digital Markets Act (DMA), designed to curtail the power of big tech, will have a far-reaching impact on the business practices of Apple, Amazon.com, Facebook, Google and other primarily US-based giants.
The EU is expected to designate these companies as the “gatekeepers” of the Internet, justifying a targeted regulatory push to rein in their outsize market power.
Illustration: Yusha
The new regulations would complement the EU’s antitrust authority, which has repeatedly been used to extract billions of dollars in fines from US tech giants and to mandate changes to their business practices.
Under the DMA, for example, practices such as self-preferencing will be “blacklisted” — presumed illegal without the need for the EU to bring an antitrust challenge to demonstrate harm to competition.
The DSA, for its part, would impose more onerous obligations on big tech companies to disclose their algorithms or remove illegal or harmful online content, including hate speech and disinformation.
Together, these measures would assert significant new regulatory control over the digital economy both in Europe and beyond.
The stakes for the big tech giants are particularly high because EU regulations often have a global impact — a phenomenon known as the “Brussels effect.”
Because the EU is one of the world’s largest consumer markets, most multinational corporations accept its terms of business as the price of admission. To avoid the cost of complying with multiple regulatory regimes around the world, these companies often extend EU rules to their operations globally.
That is why so many large non-EU companies follow the EU’s General Data Protection Regulation across all of their operations.
NOT AN OVERREACH
Unsurprisingly, big tech leaders and other critics of EU regulation are pushing back, accusing the EU of regulatory overreach and protectionist motives, but the EU is not unfairly infringing on successful US tech companies’ commercial freedom, nor is it undermining US regulators’ autonomy.
Even if EU regulations do prove costly for big US companies, many smaller US firms will benefit from them. For years, these smaller US players have had to rely on the EU — rather than on their own government — to challenge the giants in their industry.
Likewise, thanks to their global reach, EU regulations have brought significant benefits to US Internet users, many of whom welcome enhanced privacy protections and less rampant online hate speech.
The US’ own inaction has paved the way for the EU’s rise as a regulatory superpower.
Embracing deregulation and techno-libertarianism as its approach to governing the digital economy, the US has long watched from the sidelines as the EU sets regulations for the global marketplace.
By abandoning international engagement and regulatory cooperation, US President Donald Trump’s administration reinforced this regulatory isolationism — effectively, albeit inadvertently, trading globalization for Europeanization.
However, the winds in the US might finally be changing. Legislators and enforcement agencies are starting to wake up to big tech’s excesses.
Earlier this year, the US House of Representatives’ Judiciary Committee’s report on competition in digital markets issued a powerful call to action and outlined a new vision for revitalizing US antitrust laws.
Moreover, the US Department of Justice is now challenging Google’s monopolistic practices (after tolerating them for the past decade), and the US Federal Trade Commission — along with 46 of the 50 states, Washington and Guam — is suing Facebook as an illegal monopoly.
It is unclear whether these steps mark the beginning of a progressive antitrust revolution in the US, or whether they will stall in a divided Congress or before conservative-leaning courts that are accustomed to a more limited role for antitrust law.
In any case, the US would do well to abandon its hands-off approach to technology companies. It needs to stop being a rule-taker and start shoring up its own regulations.
PRIVACY LAW NEEDED
A federal privacy law would be an ideal place to start, considering that the idea already has support from leading US companies such as Microsoft, Facebook and Apple.
A more robust privacy law would help the US reinstate data flows with the EU, which were halted by the European Court of Justice, owing to the lack of privacy protections in the US.
It would also allow the US to address its concerns about Chinese government surveillance of US citizens. The Trump administration’s haphazard effort to ban the Chinese-owned social media platform TikTok from the US market is not a substitute for regulations to protect Americans’ personal data.
The case for renewed US regulatory leadership is even more compelling in view of China’s increasing global influence over tech-governance standards.
Chinese companies, all with varying ties to the ruling Chinese Communist Party, have supplied critical technological infrastructure to countries around the world. China has also supplied artificial intelligence-driven surveillance technology to numerous governments that are eager to pursue illiberal ends.
Given China’s authoritarian vision of the Internet, the US would gain much from working closely with the EU on regulating big tech and the digital economy. Their disagreements when it comes to antitrust, privacy and taxation are manageable, and should be addressed as part of a broader effort to reset transatlantic relations.
Instead of fighting the EU’s legitimate attempts to defend its vision of the digital economy, US president-elect Joe Biden’s administration should explore how it can work with the EU to advance a shared vision.
After all, citizens on both sides of the Atlantic want a human-centric Internet that is grounded in the values of liberal democracy and individual autonomy.
Anu Bradford, a professor of law and international organization at Columbia Law School, is a senior scholar at Columbia Business School’s Jerome A. Chazen Institute for Global Business.
Copyright: Project Syndicate
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry