Don’t Let Harmful EU Tech Regulations Spread Across the Globe
The European Union’s rejection of the digital revolution has been a cancer on the continent’s tech sector, member countries’ per capita GDPs, and the various U.S. companies that European regulators treat like ATMs. Now, the EU’s innovation-stifling Digital Markets Act (DMA) is looking to metastasize around the globe. It’s up to the U.S. to stop this from happening.
The law, which is central to the EU’s overall approach to tech policy, came into full force in 2024. It prohibits large digital platforms, designated as “gatekeepers,” from utilizing certain business practices — for example, self-preferencing their own products or services. It also obligates them to other practices, such as ensuring interoperability with their competitors’ products.
Instead of considering the harms and benefits to consumers of these practices on a case-by-case basis, as U.S. antitrust laws would do, the DMA bans them outright. Violations trigger astronomical fines of up to 10 percent of a company’s global annual turnover, or up to 20 percent for repeat offenses, and those funds go directly into the European Commission’s coffers.
It is no coincidence that all but one of the EU-designated “gatekeepers” subject to DMA regulations are U.S. companies: Google owner Alphabet, Amazon, Apple (both its iOS and iPadOS operating systems), Meta, Microsoft, and Dutch-based, U.S.-owned Booking.com. The lone outlier is the China-based owner of TikTok, ByteDance.
The EU has already issued $800 million in fines to U.S. “gatekeepers” under the DMA. More broadly, various EU digital regulations resulted in $6.7 billion in fines on U.S. tech firms in 2024 alone.
Just as U.S. politicians like to hike taxes on out-of-towners for hotel stays to generate revenue and avoid direct political accountability, EU regulators have found it politically advantageous to regulate and fine foreign companies — particularly those that do not have large or well-organized bases of domestic support to push back. The harm of the regulations themselves is distributed broadly among fragmented European consumers who no longer enjoy helpful maps integrated into their search results, the latest AI offerings, or the superior security that existed before mandated interoperability. But the special interests — like smaller domestic competitors — that benefit from degrading U.S. products are far more politically organized; they cheer the EU’s regulatory interventions. And big fines allow EU politicians to increase their regulatory fiefdom and professional prestige.
Rejecting the EU’s rent-seeking, anti-innovation policies, the U.S. has adopted a very different approach to regulating the tech space. America’s light-touch approach guided by consumer benefit has resulted in American tech leadership on the world stage, the creation of billions of dollars in wealth, and countless benefits to consumers. The U.S. boasts 690 tech companies valued at more than $1 billion, with a total valuation of $2.53 trillion. By contrast, the EU has only 107 firms of that size, totaling a comparatively meager $333.38 billion. Rather than pivoting to the U.S. approach to bolster its own tech firms, the EU has chosen to extract rents from the U.S. tech sector to justify its decision to maintain a regulatory structure more prominent than the domestic industry it regulates.
Unfortunately, the EU’s destructive approach is spreading. Australia, Brazil, India, Japan, South Korea, and Turkey are all either considering or have already passed regulations that mirror the DMA.
DMA fines and regulations already hurt consumers outside of the EU by diverting companies’ resources away from innovation, research and development, and capital investment and toward compliance costs and penalties. More countries adopting their own versions of the DMA would mean more of the same.
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