Analysis

EU puts guardrails on US tech giants

Unsplash / Christian Lue

As the engine of American capitalism, and a largely dysfunctional United States regulatory framework, have enabled the rise of technology behemoths that dictate the rules of our radically connected world, one force is successfully reining them in: the European Union. 

For over a decade, the European Union has largely stood by as Silicon Valley startups, software companies, and the broader United States technology industry have called the shots. Corporations have used their syndicate-sized strength to bully local and national governments in the trading bloc and have threatened to withhold service or withdraw from markets altogether if they are regulated in any way. What once required long drawn-out litigation on the national level (usually ending in a stalemate or a non-win compromise) has been replaced by rigorous regulation and legislation across the entire bloc. 

On Antitrust and Competition
The National Law Review released a comprehensive brief of EU regulatory posture finding, among other broad categories, that Brussels has targeted vast enforcement priorities that will limit the scope and govern the conduct of US and global tech firms. Areas addressed include:

  • Defective Products, and the liabilities that manufacturers face;
  • Artificial Intelligence, defining liability of people harmed by AI products and services; 
  • Energy, regulating maximum and minimum temperatures for systems;
  • Cryptocurrency and Crypto-Assets, defining all of crypto as equivalent to financial instruments requiring vigorous regulation and oversight;
  • Digital Strategy, insulating European capital markets, financial services systems, and retail investment ecosystem from international influence; and,
  • Environmental impact, including transportation vehicles and aircraft that must become more eco-friendly over the next decade.

On Devices
In the past two weeks alone, the European Union's regulatory bodies have acted on the European Parliament's passed legislation to force lifestyle computing giant Apple to comply with its mandates, affecting everything from compulsory USB-C to third-party store interoperability. Though this legislation impacts all device manufacturers, Apple's proprietary services - its lightning port and app store - have been key elements of its product strategy in prior years.

On Gaming
The European Union passed gaming and esports legislation that is emboldening a deep probe into Microsoft's $69 billion acquisition of Activision Blizzard and could ultimately spell deep trouble for the controversial merger. Considering the EU considers Microsoft's fundamental architecture as 'irreparably damaging' to the EU's cloud ecosystem, further scrutiny will compound a dim view of European gaming's primary revenue generation models through micro-transactions and so-called "loot boxes" as tantamount to gambling.

While the EU has built an extensive regulatory framework around data and privacy, most famously the now-ubiquitous General Data Protection Regulation (GDPR) in 2016, its actions to regulate the behavior of global companies beyond standards of conduct has been gradual prior to this year. As the EU and US coordinate and harmonize member states' isolation and rejection of China as threatening to national security interests - most recently, the EU compelling Germany to shut Huawei out of its markets at the US' request - there is widespread evidence that both global powers are collaborating to rein in technology giants in ways that are complementary, rather than competitively.