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Washington Examiner
Restoring America
22 Sep 2023


NextImg:Europe is targeting American companies to protect its nonexistent tech industry

Not two months after Amazon sued the European Commission for unfairly targeting American companies, the commission has once again demonstrated its dedication to protectionism. European regulators recently designated six companies, Alphabet , Amazon, Apple, ByteDance, Meta, and Microsoft, as “gatekeepers” under the Digital Markets Act, subjecting them alone to strict rules designed to increase competition.

The Digital Markets Act was supposed to be impartial, but when five of the six companies targeted under it are American, it’s hard not to wonder whether the European Commission is approaching tech regulation fairly. The United States must step up before Brussels becomes the de facto tech regulator of the world.

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The targeting of American companies under the DMA is merely the latest example of Europe’s partisan treatment of our tech industry. One of the most obvious examples of European tech protectionism is the enforcement of the General Data Protection Regulation. Unlike the DMA and DSA, which have size thresholds for enforcement, the GDPR applies relatively equally to all companies that collect and process the personal data of European consumers. While GDPR devastated Europe’s innovation ecosystem, at least it was written in a neutral way.

But, while the law itself is neutral, enforcement of the GDPR has been far from neutral. Of the 10 largest fines levied under the GDPR since its implementation, nine have been levied against tech companies based in the United States. Adding insult to injury, Meta was slapped with a record-breaking €1.2 billion fine earlier this year, continuing a trend in which fines on American companies are significantly higher than those on companies from other countries. Meanwhile, European regulators are upset that enforcing the GDPR against companies based in the United States isn’t easy enough and requires too much due process.

With more recent tech regulations such as the DMA and DSA, European regulators have gone one step further. Led by Thierry Breton, the commissioner for the Internal Market of the European Union, the European Commission has decided that American companies need to be taken down a peg in order to make room for new European counterparts. Breton, a former tech CEO himself, has made it clear that the European Commission should “help create European champions to compete globally.” To do this, the EU has decided to implement protectionist policies that impose special restrictions on large tech companies of their choice.

The EU claims that the DMA and DSA are intended “to keep the internet safe, protect fundamental rights, and enhance competition in digital markets.” Yet, the European Commission made sure that the primary target of these laws would be American tech firms, with the occasional Chinese conglomerate thrown in for good measure. Meanwhile, European companies such as SAP SE that likely meet DMA’s thresholds are ignored.

In doing so, the EU has unfairly strapped American companies with onerous regulations and is likely to arbitrarily enforce them as it has with GDPR in an effort to hamper American commerce and innovation. In essence, the European Commission is picking winners and losers — and the losers all seem to be American businesses.

While it may be too late to radically alter the GDPR, there may still be time to redress Europe’s protectionist targeting of American tech companies with the DMA and DSA. Senior U.S. officials such as Secretary of State Anthony Blinken have used the threat of Chinese domination and trade policy levers to bring the EU to the table and discuss collaborative regulation of artificial intelligence. Many of these same arguments and policy levers apply just as much to other areas of the tech ecosystem and should be used beyond AI policy.

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If the EU is going to use its economic power to punish American companies in the hopes of revitalizing its own dead tech industry, the U.S. should use its resources to defend the rest of the tech industry from unfair protectionism.

Luke Hogg is the director of outreach at the Foundation for American Innovation, where his work focuses on the intersection of emerging technologies and public policy. You can follow him on X at @LEHogg.