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June 17, 2021

Could the US and EU really work together to rein in Big Tech?

The US and EU have agreed to collaborate on tech regulation, but the road ahead could be rocky.

By Laurie Clarke

Technology dominated EU-US talks that took place in Brussels this week. The two launched the Trade and Technology Council (TTC) to lead a “values-based global digital transformation”. At the same time, the White House issued a warning to the bloc about its Digital Markets Act – blockbuster legislation that takes aim at US tech giants. When it comes to regulating Big Tech, do the US and the EU now agree on more than they disagree?

US EU big tech

President Joe Biden met with European leaders at the G7 Council in Cornwall last week. Tech policy is high on the agenda for the two powers. (Photo by Leon Neal – WPA Pool/Getty Images)

The TTC is pitched as a forum for EU-US collaboration on trade, economic and technology issues. Key priorities include cooperating on tech policy, collaborating on international technical standards (something that has become geopolitically fraught), cooperation on regulatory policy and enforcement, and the promotion of innovation by EU and US firms.

The collaboration on tech and regulatory policy is particularly novel, given it is a long-time sticking point between the EU and the US. “It […] gives us tools to address threats such as unfair competition and the misuse of new technologies,” said EU trade commissioner Valdis Dombrovskis in a statement. “This is a top priority for the EU, and we warmly welcome the fact that it is now also at the top of the transatlantic trade agenda.”

But how exactly this could work in practice is still in question. The Financial Times reported that the National Security Council, an arm of the White House, wrote to the EU last week to warn against “protectionist” tech policies that target US companies. In particular, the NSC was concerned by the “tone” of comments by European Parliament rapporteur for the Digital Markets Act, Andreas Schwab, who said the DMA should target only the five biggest US firms (Google, Apple, Amazon, Facebook, Microsoft).

The Digital Markets Act is the EU’s wide-ranging tech legislation that targets “gate-keeper” companies (i.e. Big Tech). It has not passed into law yet, and is due to be debated in the European Parliament. But the NSC warned against passing the legislation in a form that focuses too much on US companies. “Such policies will […] hinder our ability to work together to harmonise our regulatory systems,” the NSC missive reportedly read.

“The DMA narrowly targets a core group of tech companies, mostly American and Chinese ones, that the EU believes have amassed too much market power,” said Daniel Castro, director of the Center for Data Innovation, a think tank that receives funding from Big Tech companies. “This is a significant departure from past practices of regulators addressing anti-competitive market behaviour and it is only targeted at the digital sector… The United States should work with the EU, but it should also be pushing back against unfair, anti-innovation, and anti-American policies.”

Will the US oppose the EU’s Digital Markets Act?

There are other signs that US opposition to the DMA may be weaker than expected. Biden has just appointed Big Tech critic Lina Khan to chair of the Federal Trade Commission (FTC), with strong bipartisan support. This is seen as a win for progressives who would like to see the tech giants’ monopoly power reined in.

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“It isn’t clear to me that [the DMA] will create a wedge issue,” says Jay Jurata, a partner and leader of the Antitrust & Competition Group at international law firm, Orrick. “The Biden administration’s appointment of Lina Kahn to the FTC, and immediate ascension to the Chair position, suggests that the administration plans to take a hard stance on antitrust in general, and digital gatekeepers in particular.”

The Biden administration’s appointment of Lina Kahn to the FTC, and immediate ascension to the Chair position, suggests that the administration plans to take a hard stance on antitrust in general, and digital gatekeepers in particular.
Jay Jurata, Orrick

While there were early murmurings that Biden could revert to the unashamedly pro-tech stance of the Obama administration (with former Google chief executive Eric Schmidt reportedly mooted for a senior role), those have been quelled by more recent developments.

“The comments reported from the NSC are one voice in the debate, but there are many other voices,” says Alec Burnside, a partner with Brussels-based Dechert, who represents businesses negatively impacted by Big Tech “gatekeepers”. He says the tide has now turned on antitrust in the US. “Already there are waves of US litigation under existing antitrust rules, but new laws are also proposed, and these target the GAFA [Google, Amazon, Facebook, Apple] in the same way as some would have the new EU DMA target the GAFA.”

But although there are signs the US really does want to work proactively with the EU on tech regulation, it is not yet a done deal. While Khan will be able to investigate and sue companies over antitrust violations, she will not be able to create new policies, and currently there are no US plans for new tech regulation.

There are also plenty of members of Congress who believe the US should push back more forcefully on the EU’s plans, and those who, although they criticise Big Tech, ultimately believe that attempts at regulation could harm innovation.

“On the US side, one key player has yet to be named – the head of antitrust at the Department of Justice,” says Burnside. “When the new nominee is identified and in position, that will be a good moment to assess where the US really stands.”

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