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How Europe Rules the Digital Economy

Europe is not home to any of the major tech firms, but it shapes digital governance worldwide, owing to the size and attractiveness of its market. Whereas American-style techno-libertarianism and Chinese digital authoritarianism have both come up short, the European Union's regulatory approach has emerged as a global gold standard.

NEW YORK – Today’s “tech war” is often portrayed as a contest for digital dominance between just two powers: China and the United States. The US is home to the world’s most powerful and profitable tech companies – including Apple, Amazon, Google, Facebook, and Microsoft, whose combined market value exceeds $5 trillion. China has the telecommunications titan Huawei, the Internet and gaming giant Tencent, and the world’s largest e-commerce retailer, Alibaba. Without its own search engine rivaling Google or a social-media platform comparable to Facebook, Europe might look like it is sitting on the sidelines of the digital economy.

But quite the opposite is true. More often than not, it is the European Union that sets the rules by which multinational tech companies operate. As the world’s antitrust chief, the EU keeps global tech companies’ market behavior in check, even when their home regulators let them operate free of regulatory constraints. Between 2017 and 2019, the EU imposed almost $10 billion in fines on Google for its anticompetitive practices.

In addition, EU regulations often determine how big tech companies gather, process, store, and monetize personal data. For example, Facebook, Google, and Microsoft have all adopted one global privacy policy – and it is one that mirrors the EU’s General Data Protection Regulation (GDPR). Similarly, EU rules influence the types of speech that Internet companies will allow on their platforms. Instead of being guided by America’s First Amendment free-speech protections, Facebook, Twitter, and YouTube follow the EU’s definition of hate speech worldwide when deciding which content to remove from their platforms.