
One that throws the tech world into confusion is the European Union’s Digital Markets Act (DMA) supposedly aimed at regulating tech giants. If implemented in its fullest form, this curb on the behavior of tech giants could put major restrictions on the operations of US firms such as Apple, Google, and Meta. And while EU legislators are pressing ahead with their reform agenda, the Biden administration is taking a more cautious perspective, perhaps because of broader geopolitical tensions.
Before DMA enforcement, the White House was besieged with petitions from industry associations and members of Congress against what was perceived as Europe’s smothering of American tech hegemony. The Biden administration criticized the EU’s regulatory approach. Still, it took no direct action against it – at least not regarding the DMA – and instead shifted focus to the war in Ukraine, strategic competition with China, and domestic issues.
As a result, tech giants are required to make deep changes to the way they do business in the EU. For instance, Apple can no longer prevent iPhone users in the EU from downloading apps from third-party app stores. Google will have to give users of Android phones a ‘choice screen’ offering them the opportunity to select another web browser or another search engine. Meta has announced that it will open its messaging platforms to competing services and allow Facebook and Instagram users to unlink their two accounts. Microsoft, Amazon, and TikTok are also modifying their businesses in accordance with the DMA.
Its importance was clear when Yale economist Fiona Scott Morton noted that “It’s the first major jurisdiction to try regulating digital platforms.” The regulation is designed to increase competition inside the platform, for instance, around issues of market concentration and consumer choice.
However, prominent US industry actors have quickly criticized the DMA, especially because half of the six firms subject to it are US companies. Still, EU officials maintain that the criteria for designating ‘gatekeepers’ were non-discriminatory.
The EU now signaled that it would enforce the DMA in no uncertain terms, with repeat offenders subject to fines up to 20 percent of the violating entity’s global revenue. In the short term, the immediate effect on US consumers might be minimal. However, economists anticipated that the EU’s example could inspire other countries worldwide to impose similar rules.
However, in contrast with the EU’s more proactive legislation, attempts to enact similar measures in the US have stalled, reflecting different approaches to how antitrust law should be enforced. Despite growing criticism of Big Tech’s market power, skepticism about broader government intervention persists in Congress, hampering efforts to pass more sweeping regulatory reform.
Instead, internal White House debates—over whether threatened cybersecurity vulnerabilities or threatened consumer harms were the bigger issues—injected caution and division into the administration’s response to the DMA.
For some, the DMA promises to be a positive step in fostering competition and transparency, while others worry it will undercut innovation and consumer choice. The Biden administration’s stance on the DMA is strikingly pragmatic in its simultaneous regard for economic and geopolitical interests.
With the European Union and the United States growing increasingly at odds about their approaches to tech, the Biden administration’s commitment to deeper transatlantic collaboration on global challenges is a sign that the Atlantic alliance is here to stay. Tensions have not disappeared, but there is no return, through arbitrage or sleight of hand, to the bluster of brinkmanship past. Behind the scenes, however, diplomats will stay busy, confirming anew that there are no easy answers to the maddeningly complex economic, political, and security challenges posed by globalization in the digital age.
Source: Eva Dou, The Washington Post March 7, 2024