Europe’s false step on tech

You’ve got to hand it to the EU’s leadership.  They are planning to welcome a Joe Biden victory with a proposal for renewed and refreshed co-operation – preferably on Europe’s terms.  

It is billed as a “once-in-a-generation” offer for the US to join the EU’s many committees and after the usual excruciating discussion, agree to adopt its approach in areas like digital regulation, competition policy, security and post-Covid action. 

No doubt a Biden administration will find something to like in the European menu.  But not as much as the Europeans might hope.

One area in particular is likely to cause enduring problems in the relationship – Europe’s approach to regulating the tech sector.  Ironically, policy makers on both sides of the Atlantic have problems with big tech – but there seems little chance of agreement on a common diagnosis, let alone a solution.

American politicians mainly fret over how social media are used.  Whereas European politicians dislike two things: big American companies, having the freedom to offer consumers products which they might enjoy. 

As neither of these problems is necessarily an issue under competition law, EU policymakers are developing a plan to stop anti-competitive behaviour before it even happens by subjecting large and fast growing companies to extra layers of rules. According to London’s Financial Times, new obligations might include:

“… a requirement to share data with their competitors or restrictions on so-called gatekeeping, whereby operators dictate the rules of digital platforms shared with rivals, [or] a ban on favoring their own services.”

Turning the digital market from a permissive environment into one where each step must be negotiated in ‘partnership’ with regulators will not wreck things overnight.  But it is likely to slow adoption and impose costs on consumers and workers.  And most tech innovation will continue to happen somewhere other than Europe.

Coupled with existing data protection legislation, this sort of market management is starting to look like a charter for digital protectionism.

It’s instructive to contrast Europe’s approach to that of China, another digital protectionist.  But China’s interference – from the great firewall to the close links between China’s tech companies and the state – is focused very much on the government’s internal and external security objectives.  The Chinese government seems more comfortable with large companies and the operation of market forces where these might lead to sector leadership.

So unless a Biden administration is tempted by Europe’s peculiar path to regulatory perdition, US tech leadership is looking safe for a few years more.

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