The EU ushered in a new era of digital regulation. Will the US follow suit?

With the DMA and the DSA, the EU has taken the lead on regulating the global digital economy. Now it’s time for the EU and the US to become even more ambitious in aligning their agenda on internet regulation, argues Andreas Schwab
Andreas Schwab voting during plenary session in Strasbourg. Photo: European Union 2017

By Andreas Schwab

Andreas Schwab (DE, EPP) is a member of IMCO, on behalf of which he recently led a delegation to Silicon Valley

30 Jun 2022

In the spring of 2022, the European Parliament and the Council of the European Union under the French Presidency agreed on ground-breaking laws that will shape the global digital economy for years to come. With the Digital Markets Act (DMA) and the Digital Services Act (DSA), the EU will significantly change how consumers and companies experience the internet. The spillover effects of these laws – termed the “Brussels effect” – in the United States and other jurisdictions will only become visible over time. Yet, already today, we see that the EU’s trailblazing role has reignited a stalled policy debate in the United States.

Like the European Union, the United States is coming to terms with the economic and societal impact of big tech platforms. Companies such as Google and Facebook have a firm grip on their product ecosystems. With that power, the big tech companies were able to build barriers to entry into their products, which reduce competition, consumer choice and, ultimately, innovation, to the detriment of US consumers and companies alike. Moreover, the US Capitol riots of 6 January 2021 showed that the amplification of fake news online has ripple effects in the real world, while highlighting that US regulators could not rein in the algorithms of social media platforms before the damage had been done.

Given the truly global nature of the internet and the business activities of large technology companies, inaction and a lack of alignment are not an option

The EU has found its answers to these challenges. The DMA will break open certain markets to allow for more competition and consumer choice, and the DSA regulates the responsibility of platforms for illegal content, products and services that are posted on their websites. While the European Parliament’s contribution to the DMA-DSA package sharpened the Commission’s proposals to address such issues, the United States Congress has only proposed, but not passed, legislation.

Several bills to address the societal and economic impacts of large online platforms have been introduced in the US Senate, with some of the most prominent being the American Innovation and Choice Online Act (AICOA), the Open App Markets Act, and the Platform Accountability and Transparency Act. They all address a subset of the issues that the DMA and the DSA tackle, but so far lag behind the EU’s ambitious twin legislation.

As the US midterm elections approach, it will be difficult for the bills to muster the necessary votes in Congress. While members of Congress appear hesitant, the Biden administration has thrown its weight behind the AICOA. Surprisingly, the embrace of this regulation came only a week after the political deal on the DMA had been struck in Brussels. Assistant Attorney General Jonathan Kanter’s and Secretary of Commerce Gina Raimondo’s public support of more platform regulation stood in marked contrast to the criticism the US government had levelled against the DMA and my initial report as the rapporteur just earlier this year. This change of stance shows that we need a deepened transatlantic cooperation on digital regulation to avoid misconceptions and proactively set the global agenda on tech regulation together.

Over the course of the DMA negotiations and beyond, I worked towards that goal. I have continuously engaged with key decision-makers in the US government, in Congress and in Silicon Valley to explain the EU’s digital policy goals. With the Russian aggression in Ukraine, the discussions on digital regulation have taken on a new urgency. It is clear to me that the US government, civil society and competitors of the big tech companies now see the need for regulation, both on the issues of economic access and competition as well as on transparency, fighting the amplification of illegal and harmful content, and user protection on online platforms.

These shared EU-US views are also highlighted in the conclusions of the second meeting of the Trade and Technology Council (TTC) in May 2022. Through the TTC, the US administration and the European Commission have committed to working on these issues, yet so far cooperation and tangible output have been limited, with low-hanging fruits being harvested first.

We need a deepened transatlantic cooperation on digital regulation to avoid misconceptions and proactively set the global agenda on tech regulation together

However, in order to safeguard our democratic liberal societies, the US and the EU need to become bolder and even more ambitious in aligning their agenda on digital and internet regulation. The basis for our sustained peace and prosperity has been the model of a state that guarantees fair and free markets while setting a high standard of consumer protection. The EU, its Member States and the US have worked together towards these goals by shaping many of the post-Second World War institutions that still contribute to a rules-based global economic order today.

Given the truly global nature of the internet and the business activities of large technology companies, inaction and a lack of alignment are not an option. The US and the EU must become global co-leaders in digital regulation to realise our vision of an open, free, secure and innovative digital economy that works for all people. To this end, we must also engage the broader forum of like-minded partners within the Group of Seven.

Our shared vision directly competes with that of illiberal countries such as Russia or China who nowadays administer their own version of the internet. The race to set the future rules governing the internet and the digital economy is ongoing, and as the speed and thoroughness of the DMA and the DSA negotiations have shown, the European Parliament is working hard to win it. Now, it is up to our US colleagues to follow suit.  

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