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Can the European Union tame American technology giants?

Can the European Union tame American technology giants?

by YCPress

December 15th local time, the European Union announced two important bills regulating digital services, the Digital Services Act and the Digital Market Act.

The bill’s provisions for stricter regulation and digital taxation of digital services giants such as some Internet companies are considered to be directly targeted at American companies (GAFAs) such as Google, Apple, Facebook and Amazon. This means that the game between Europe and the United States in the field of digital economy will usher in a new node.

The Digital Services Act, which focuses primarily on social responsibility, aims to strengthen the responsibility of web platforms in dealing with illegal content such as disinformation, terrorism, hate speech, and counterfeit and inferior products.

The Digital Market Act focuses on the economic aspect, the main purpose of which is to ensure that enterprises can compete fairly with the Internet giants with “gatekeeper” status within the EU market.

For violations, the Digital Markets Act proposes severe penalties of up to 10% of the company’s annual turnover. For platforms with “systematic non-compliance”,¬†EU regulators may take remedial measures against the company’s “structure level”, implying that the European business of technology giants may be split.¬†Although the bill does not directly name which companies will be included in the “gatekeeper” list, European media generally believe that the American technology giants are likely to be included.

Deutsche Welle commented that 10 companies, including GAFA, will be designated as Internet “gatekeepers”, which means that they will be subject to more specific and stricter regulatory constraints. Reuters commented that this is a “landmark law” that will limit monopoly from the source.

The European Union seeks to adopt legislation to restrict and weaken the U.S. technology giants, on the one hand, to ensure information security and promote the competition of local companies with American technology giants.

Due to Europe’s failure to successfully develop a domestic digital giant, and the GAFA from the United States occupies a high market division in Europe, it is difficult for European local technology companies to compete with it on an equal footing. In order to avoid becoming a “colony” of American technology giants, the European Union hopes to respond through legal means.

On the other hand, the EU also has the consideration of formulating a digital bill to compete for a voice in the global digital field. The EU has been seeking to enhance its voice in rules in the global digital field for many years.

For example, in March 2018, the European Commission proposed legislation to impose a 3% digital tax on large Internet companies with annual revenue of more than 50 million euros in the EU. Regarding the legislation, German newspaper Le Monde quoted Thierry, the EU Commissioner for Internal Markets on the 15th, as saying: “This is related to the values of the EU and the future of the EU digital economy.”

A key question is, can the EU tame the American technology giants through legislation? According to the New York Times, lobbyists of American technology giants are lobbying for the European Union with “unseen large spending” in Brussels.

At the same time, it also threatened the European Union that the new bill would cost Europe 2 million jobs and 85 billion euros of GDP.

In the face of the new actions of the European Union, not only will the American technology giants not “obediently”, but also the U.S. government will not “take it all the way”.

The French government planned to impose a 3% digital tax on large multinational Internet companies in 2019, and then the United States counterattacked – the Trump administration announced a 25% tariff on cosmetics, handbags and other goods from France. In June this year, the Office of the United States Trade Representative announced that it would launch a “301 survey” on the digital tax to be levied by 10 trading partners, including the European Union, the United Kingdom and Italy.

With the entry into force of the Digital Services Act and the Digital Market Act, trade friction between Europe and the United States may be expanded from traditional real economy products to virtual economy products.

It can be said that the economic and trade game between Europe and the United States has gradually developed into an all-round and multi-level “big chess game”, and this tension may further escalate in the future.