The opportunities and challenges are often the same. This is therefore the case for the moment with the United States and Europe.
The European Commission wants to seize a “once in a generation ” opportunity to reset transatlantic relations now that US President Donald Trump is about to step out. The administration of President-elect Joe Biden will want a partnership with Europe to be at the heart of a alliance of liberal democracies which will present an economic and political alternative to China.
However, the EU and the US, which are made up of 27 countries, continue to be at war over technology regulation, trade, and corporate taxation. Brussels is right to say that it is time to start from scratch. But getting there will require thinking about these issues as a whole, rather than in silos.
Start with technology regulation. The commission is considering new legislation it would take the most entrenched Big Tech companies, such as Facebook and Google. The idea is to correct the failures of existing antitrust law, as competition policy focused on consumer prices is not built for the era of digital barter. The US Department of Justice Google case can start to change that, but it will take years.
The commission’s proposals, which would be submitted to EU governments for approval, would define the role and responsibilities of digital “gatekeepers”. They would force them to make their systems more open and interoperable, subject them to algorithmic audits and impose sanctions, such as divestiture of assets, for repeat offenders.
Silicon Valley is already does a lot of lobbying against the proposals. Businesses are counting on the new Biden administration, which will include a number of White House tech executives from Barack Obama’s time, to help them stand up to Europe. It shouldn’t. One of the huge risks for the new administration is that it will be seen as too comfortable with concentrated corporate power. Witness the cries already coming from the left on some of those named by Mr. Biden who have a background in private equity.
Individual appointees should be judged on their own merits. If we didn’t let anyone from the financial or tech sector into the new administration, we would be the poorest for that. Take Gary Gensler, a former head of Goldman Sachs, who is now Mr Biden’s senior market adviser. He cleaned up the derivatives business at the Commodity Futures Trading Commission during the Obama years.
That said, it’s a crucial time for the new president to send a signal on how he plans to control Big Tech as an industry – or not. European regulations are not perfect, but they are much better than what the United States, with the exception of California, currently has, which is not much.
Each party needs a quick agreement on how to regulate cross-border data flows, given that digital commerce is the only type that is expanding. The European proposals overlap with the DoJ’s antitrust case in that they both focus on how large platforms can get customers to choose their own products and services – an argument from Google contest. This should be the starting point for a new transatlantic approach to reducing the sector’s monopoly power, which only increased during the pandemic.
It could also be part of the West’s response to China’s state of digital surveillance. This makes Perfect sense for the US and the EU to create a common set of standards for 5G and the Internet of Things, which will dramatically increase the depth and breadth of digital data over the next few years, using local equipment from companies such as Qualcomm, Nokia and Ericsson. China plans break free from foreign technology and supply chains by 2035. It is time for the United States and Europe to forge their own digital alliance.
It must be diversified. As we move from the consumer internet to the industrial internet, Europe, as a major producer of potentially ‘smart’ devices such as appliances and automobiles, has a lot to gain – but also to lose. For example, it’s easy to imagine that Google’s Nest division owns much of the data generated by a German washing machine or a French refrigerator, without the sharing and portability of data that is at the heart of the new proposals of the ‘EU.
While the new rules are geared more towards the consumer internet, EU policymakers are study the internet of things and plan to release a consumer report on IoT by the middle of next year. European companies like Siemens and SAP are ahead of the curve when it comes to the industrial business-to-business internet.
Nonetheless, I would like to see all future digital competition solutions include public databases in which anonymized personal and industrial data is shared, with independent oversight. This would be a way to ensure that companies of all sizes, as well as researchers and academics, can have equal access to data.
A transatlantic agreement on how to tax data extractors – whether they are platforms, fintech or French manufacturers of luxury handbags. The public sector needs the revenues. And the Biden administration cannot afford to be as comfortable with Silicon Valley as the last Democratic administration was.
The perception that Democrats have sold themselves out in corporate interests is one of the reasons we got Mr. Trump. Restoring confidence in the public sector must also be an end goal of any new transatlantic relationship.