In an era dominated by tech giants worth trillions of dollars, no European firm started from scratch in the past 50 years is today valued at more than a mere hundred billion (Spotify, a music-streaming service based in Sweden, hovers around the mark). The absence of entrepreneurial vigour is a recurring source of frustration for European politicians in search of economic pep and tax receipts. With no local corporate tech titans to berate into creating jobs, German chancellors, French presidents and their like have had to grit their teeth as they beseeched one visiting American bro after another to consider setting up a research facility, artificial-intelligence (AI) hub or gigafactory in their country. As both sides posed for the obligatory selfie, it could be hard to tell who had the upper hand: the elected leaders, or the globally known plutocrats with net worths bigger than most EU countries’ budgets? At least, the politicians could tell themselves, even the mightiest Amazons or Facebooks of the world would have to follow European laws as a condition of doing business there.
It turns out that this may be an imposition too many for the world’s techies. Even before their bosses flexed their political muscles by snagging prime seats at the inauguration of Donald Trump on January 20th, a refrain could increasingly be heard that the European Union’s nagging regulations are an annoyance that some of them would rather not abide by. Newish EU rules designed to ensure that digital markets do not turn into cosy monopolies, to limit the spread of harmful bilge on social networks and to regulate AI are increasingly being painted as a Euro-ploy standing in the way of Trumpian plans to make America great again (again). Europe is already dreading the prospect of a trade war with its biggest commercial partner by far, not to mention the future of its decades-old security guarantee from America as war rages in Ukraine. If Mr Trump orders Europe to ease up on American tech firms to please his new corporate chums, can his demands be resisted?
Tech firms have three gripes about EU regulation. The first concerns its enforcement of antitrust rules, which has long been more stringent than America’s (bar a burst of hyperactivity under the Biden administration). This has resulted in a slew of fines on Apple, Alphabet and the like; throttled their acquisition drives; and even raised the prospect that some firms may be broken up. Another gripe is that Europe insists content that would be illegal offline is also illegal when posted on a social network, and demands that algorithms that sway public discourse by pushing some users’ posts over others must be subject to transparency rules. Lastly, the EU (with the help of America, under previous management) has cracked down on what it deems unfair tax arrangements, which siphon profits to low-tax jurisdictions.
The tech outfits’ hordes of lobbyists have long muttered that Brussels hyper-regulation is not only bad for them but for Europe, the very reason the continent’s economy is stuttering. As if to warn Europe, Apple and Meta are among those that have delayed the launch of products in the EU market. Now they seem to be goading Mr Trump to act on their behalf. Mark Zuckerberg, Meta’s founder, has painted the fines imposed on big tech by the EU as akin to tariffs—the kind of thing Mr Trump should retaliate against, in other words. Earlier this month he described EU rules as “institutionalising censorship”, as if Eurocrats’ demands that rape videos must be taken down were like North Korean brainwashing. In October Mr Trump railed at American companies being “taken advantage of” by the EU. His running-mate, now vice-president, J.D. Vance, questioned whether America should keep defending Europe through NATO if Europe regulates X, the social network owned by Elon Musk, who is now an adviser to Mr Trump.
At home, the new president has already kiboshed some of the global tax rules that big tech railed against. Getting the EU to stand down will be harder. Much of the regulation it has crafted reflects its ancestral wariness of big business. Ensuring dominant companies do not profit unduly from their market power is not some fad: it is enshrined in the treaties that govern the EU. Limiting big tech’s sway over users is a matter of human rights, not easily circumvented. Something of a consensus exists that bits of EU regulation are indeed too cumbersome; there are moves to roll some of it back. But most Eurocrats believe that its rules are on the whole working as intended.
Regulators at the gates
Getting the EU to stand down would be a win for big tech. Not only is the European market second only to America when it comes to rich users, but regulations crafted by the EU are often copied by jurisdictions far beyond its borders. This “Brussels effect” is a point of pride for Europeans. Anu Bradford, a tech expert at Columbia Law School who coined the term, says she expects the EU will hold firm. “Nobody in Europe will look at big tech companies this week and think, ‘We wish they were more powerful’.” The fact that Mr Musk has used X to boost hard-right parties in Europe has made policymakers there all the warier.
Various EU officials insist it is business as usual and that its many investigations of big tech firms will be concluded and made public soon, fines and all. But the president of the European Commission, Ursula von der Leyen, told the World Economic Forum in Davos the day after Mr Trump’s inauguration, that Europe would have to be “pragmatic” in dealing with the new administration. The final stage of punishing tech giants is in part a political decision. There are reports of the commission “reassessing” how this might be done, though no clear sense of how this will happen in practice. Europe will find it very hard to stand down against big tech—but it may not like the price of standing firm. ■
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