The EU as a digital regulatory superpower: Implications for the United States

Over the past five years, the European Union has led the charge on digital regulation, enforcing digital taxes, raising privacy standards, and levying landmark antitrust fines. The bloc has also shaped the debate on pressing issues such as ethical artificial intelligence, the regulation of social media platforms, and the reduction of online harms such as disinformation.

Due to the size of the EU market and relative US inaction on digital regulation, countries and companies around the world have had to adopt some European standards in the area (with varying levels of enthusiasm). This has often brought the EU into direct conflict with American tech companies and, subsequently, the current US administration, further complicating an already strained transatlantic relationship.

It was with this in mind that the European Council on Foreign Relations – in collaboration with Telefónica and the Carnegie Endowment for International Peace – organised a closed-door workshop on the implications of EU tech regulation for the United States, and on whether a common transatlantic vision for the digital realm can prevail. The meeting took place in Washington on 23 October 2019.

The EU approach

The European Commission has set itself an ambitious agenda: to promote European solutions to digital problems and achieve tech sovereignty, via a raft of initiatives on everything from artificial intelligence to cybersecurity. One EU participant in the workshop explained that Europe’s bid for tech sovereignty is simply a drive to acquire the independence and capacity to put its house in order and lead by example on digital issues (as opposed to the kind of geopolitical coercion for which it is ill-equipped).

Various attendees on the US side questioned this narrative, asking whether European tech sovereignty was truly about the capacity to act or the capacity to act alone, given the EU’s recent unilateral moves on digital issues. US participants also highlighted the EU’s propensity for arm-twisting not only on digital questions but in other areas, such as its normative commercial policies.

There was a consensus, however, that Europe has been relatively slow to align its economic instruments with its geopolitical priorities. The US is much more advanced in weaponising its economic might to defend its interests and pursue its foreign policy agenda. In contrast, national security and foreign policy have been largely absent from EU debates on trade and other areas of economic policy.

The EU will struggle to act as a regulatory superpower in the digital space unless it becomes a true digital superpower in its own right.

Furthermore, attendees argued that the EU will struggle to act as a regulatory superpower in the digital space unless it becomes a true digital superpower in its own right. The bloc should avoid pursuing a solely defensive approach to the issue; regulation should go hand in hand with significant investment in technology and the digital education of the workforce. US participants warned of the business risks for European entrepreneurs and start-ups posed by the Commission’s perceivedly unpredictable and inconsistent regulations, citing the legal uncertainty that surrounds European copyright laws.

The US approach

European participants countered that, while the EU may be falling behind on the economic side of the equation, Brussels is aware of the issue and is trying to address it. Meanwhile, EU participants found it far more concerning that the US “has no idea how to regulate” and continued to show little enthusiasm for doing so – leaving Europe to generate and implement ideas about online regulation. Washington’s failure to legislate, they argued, is tantamount to a lack of leadership, allowing other actors to write a digital rulebook that will partially govern US companies.

One US participant contended that it is harder to make laws in the US than in Europe – and that that is a positive thing: “we shouldn’t legislate for the sake of legislation”. Yet several US attendees admitted that the Trump administration suffers from a lack of policymakers and expertise on digital issues in comparison to its predecessor, presenting a significant short-term challenge.

There was an agreement among US participants that, even if the Trump administration had sufficient digital expertise, the US would never wholly accept EU-style regulation. In this, they pointed to Barack Obama’s failed attempts to introduce digital privacy legislation throughout his eight years as president. The US diverges from the EU on three key points relevant to digital regulation: US antitrust legislation, which favours the government less than its European equivalents do; the lack of a real US digital regulatory framework; and the degree of protection afforded to online platforms by the First Amendment.

A road map for transatlantic cooperation

Yet several participants argued that there are more similarities between the US and EU positions on these issues than there are differences – particularly in their shared support for the values of an open society online. This, they believe, is common ground upon which to base regulation and policymaking. In light of the wholly different Chinese position (vis-à-vis privacy, surveillance, and freedom of speech), the US and the EU should not see themselves as two points in a triangle but as two allies in need of a harmonised approach.

Meanwhile, key actors such as India – which is potentially a pivotal player given its significant market size and digital prowess – are currently deciding how they will address several of these issues. A united transatlantic position may have a significant influence on the direction these actors decide to take and, as a result, on future technology standards.

Participants had several ideas about how the US and the EU could move beyond their persistent regulatory and technological disputes to establish this common position. Firstly, they should focus on their underlying values and goals – as opposed to the approaches and tools they use to achieve them, which will likely continue to differ. Admittedly, this will not be entirely painless, as it should first involve a process of defining policy goals that could hit major bumps on discussions of relatively contentious issues, such as the creation of a level playing field in the digital ecosystem through the application of antitrust legislation, levies, and other measures.

As such, it is crucial that the EU and the US establish a relationship based on mutual recognition rather than identical views. This flexible arrangement should allow the parties to adopt differing frameworks in the pursuit of similar results. Meanwhile, the US and the EU can begin to make progress in several areas in which alignment should be relatively straightforward, such as cybersecurity and the creation of a transatlantic digital marketplace. This would eventually enable both actors to focus on the big picture: shaping the world’s digital ecosystem.