Europe’s proposed Digital Markets Act targets five American tech giants as gatekeepers and potentially no European or Asian companies. Amazon, Apple, Meta, Google, and Microsoft – and only them – would face a list of dos and don’ts, with fines of up to 10% of global turnover for violations.
Yet Europeans seem surprised that the US government is angry. Instead of plowing ahead, they need to take into account American criticism. The fate of the much-ballyhooed democratic transatlantic tech alliance depends on it.
Earlier this month, US Secretary of Commerce Gina Raimondo expressed “serious concerns that these proposals will disproportionately impact US-based tech firms.” European policymakers reacted with shock and horror. Thierry Breton, the EU internal markets commissioner, told the FT that he was “astonished,” and accused Raimondo of “lobbying” – a dirty word in French – on Big Tech’s behalf. French Digital Minister Cédric O lashed out to Politico, saying that Europe had not complained about the US Cloud Act even though it had its own “serious concerns” about the law, which allows Washington to obtain overseas personal data.
Raimondo tried to defuse the brewing confrontation. She issued a statement expressing support for the goal of European policymakers to ensure genuine competition in tech markets. But Europeans should be careful. They are misreading US politics if they believe they can plow ahead without consequences.
It’s easy to see why Europeans might get the wrong impression. Progressives in the Democratic Party led by Senator Elizabeth Warren said the Secretary’s remarks “appear to publicly undermine the Administration’s previously announced policies to protect consumers and workers from Big Tech monopolies.” And US competitors of the big platforms, led by Yelp, Felt, Genius, and Beeper, demanded a meeting with Raimondo, saying they “have repeatedly raised concerns about the anti-competitive conduct of those dominant internet platforms and have provided evidence to European policymakers in the drafting of the EU legislative proposals.”
Even so, the majority of the US political class will never support what they perceive as a European crusade against American corporate superstars. Mainstream Democrats favor an antitrust crackdown against Big Tech monopolies – but they don’t like the European proposal. Senator Sherrod Brown said he “would prefer for the Federal Trade Commission and the Department of Justice to do the regulating, rather than bureaucrats in Brussels.”
The left-leaning Chamber of Progress published a letter with three other tech groups praising Raimondo for defending US workers. While expressing support for “robust competition in the technology,” it said the Administration needed to speak up. “Your team is doing what any US Administration would do – stand up for US workers in the face of discriminatory foreign regulation,” the letter reads.
Republicans, particularly the America First portion of the party, will oppose a European-led crackdown on American Big Tech. While Republicans may have found some agreement with Democrats about holding platforms more accountable for hosting noxious content like child pornography, they are loath to support any efforts to crack down on political speech.
How might it be possible then to avert a transatlantic confrontation? Although it is unrealistic to expect Europe to junk the DMA and its gatekeeper rules, the law’s scope and provisions could be modified. The scope could be broadened. Why is Amazon a gatekeeper and not the Polish marketplace Allegro, which has 33 percent of the Polish e-commerce marketplace compared to Amazon’s one percent? Under the current DMA, the reason is that Allegro only operates in one EU country, while Amazon is present across much of the European Union. But a dominant player is a dominant player, in one country or many countries. And why is no Chinese company included? While it is true that Alibaba has a small European market share, what about TikTok or Tencent?
Another beneficial change would be to label gatekeepers only for specific markets with a few players. E-commerce players proliferate. But there are only two main app stores, one run by Apple, the other by Google. There are many cloud providers, even if the three biggest are Americans. But a handful of electronic book distributors predominate. Regulate Amazon Kindle, not Amazon Marketplace or Cloud. Similarly, a few social media companies dominate. Regulate LinkedIn and Facebook. But there are many messaging services, from Telegram to WhatsApp. Don’t regulate them.
Most important, the final DMA should respect different Big Tech business models. It makes little sense to impose the same rules on a search engine such as Google as a hardware player such as Apple, not to mention an e-commerce company such as Amazon. Instead of blanket prohibitions, tailor the rules.
Most American policymakers could accept such a “proportionate” regulation. Otherwise, as European intentions clarify, US opposition is bound to mount and so are transatlantic tensions. A damaging split over reigning in Big Tech must be – and can be – avoided.
Bill Echikson is editor of CEPA’s Bandwidth content stream.
Bandwidth is an online journal covering crucial topics surrounding transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.