The Biden administration sent two official letters of protest to Brussels expressing concerns, but stopped short of taking the matter forward, the people said. There were differing views within the administration about whether Washington’s role should be to rally around the business interests of Big Tech companies.
There was also the Ukraine war, an escalating challenge from China, and a host of other issues on which Biden administration officials were seeking European cooperation. They had no intention of derailing the transatlantic relationship surrounding Big Tech.
“The Biden administration has made a deliberate decision to work with the European Union and has made a concerted effort,” said Jorn Fleck, senior director of the Atlantic Council’s European Center. “Not only in ‘Europe’, not only through our traditional recourse, NATO, but also through our bilateral relations with the major European countries, but especially with the EU.”
Europe’s Digital Markets Act (DMA) is now in full force, with Thursday the deadline for companies to comply. As a result, in the European Union, which has 27 member states and is the world’s second-largest economy after the United States, all but one of the high-tech companies (all American companies) have had to make major changes to their services. occurred.
Perhaps most notably, Apple will begin allowing third-party app stores on EU users’ iPhones, creating a crack in its ecosystem. Google presents Android phone users with a “choice screen” that allows them to easily switch between Google’s web browser and search engine if they wish. Meta allows other messaging services in the European Union to connect to his WhatsApp and Messenger, and gives users the option to unlink her Facebook and Instagram accounts.
Microsoft allows EU users to disable Bing Web Search on Windows. Amazon will ask EU customers for consent to use their data to personalize ads. TikTok allows EU users to fully download their data.
Fiona Scott Morton, an American economist at Yale University who was appointed as the European Commission’s chief competition economist last year but withdrew after a backlash that she was not European, said: “This is the first attempt to regulate digital platforms. “It’s a major jurisdiction.” He said the DMA “is taking the approach that the way to increase competition is to create competition on the platform, not necessarily try to replace the platform.”
The reason for the anger in the U.S. industry is that five of the six companies subject to the DMA regulation are headquartered in the United States: Amazon, Apple, Microsoft, Google’s parent company Alphabet, and Facebook’s parent company Meta. That’s the point. Number six is TikTok’s parent company ByteDance, which is headquartered in China.
EU officials said they applied neutral criteria to determine which companies are powerful enough to count as internet “gatekeepers,” a designation the law gives to covered entities.
A European Commission spokesperson said that if companies ignore the DMA, the regulator will act swiftly and fine repeat violators up to 20% of a company’s global revenue. “We stand ready to take decisive enforcement action using the full toolbox available to us under the DMA,” the spokesperson said, adding that the violation case would be resolved within a year.
While the immediate impact on U.S. consumers is limited, economists say the move to the EU could prompt some other countries to follow suit.
In the United States, some lawmakers have been trying to pass legislation similar to the DMA, but antitrust regulations are viewed with more skepticism than in Europe, so far without success. Congress is considering cutting $45 million in funding for the Justice Department’s antitrust division, which has two antitrust lawsuits against Google and an ongoing investigation into Apple.
Abusing a dominant market position has long been illegal in both the United States and the European Union. The European Commission on Monday fined Apple nearly $2 billion in a separate antitrust investigation over issues raised by music streaming service Spotify. However, the DMA provides more specifics regarding the Internet sector, prohibiting gatekeepers from blocking smaller rivals from building applications on equal footing, and prohibiting users from switching services. This makes it difficult to accumulate personal data across multiple services without the user’s permission.
These stricter provisions have proven problematic for the Biden administration, whose concerns about the bill include the possibility of cybersecurity vulnerabilities due to provisions requiring access to third-party app stores. There are also concerns that this may increase. However, the Biden administration’s Federal Trade Commission and Department of Justice have taken strong positions in combating consumer harm from domestic Big Tech, and opinions within the administration are divided on the issue.
Administration officials have been cautious about speaking out on the issue because they have been criticized for being too critical of or too supportive of the DMA.
Commerce Secretary Gina Raimondo came under intense scrutiny from progressive lawmakers in 2021 after saying she had “grave concerns” about the DMA, and Sen. Elizabeth Warren (D-Mass.) He lashed out at her for carrying water. FTC Chair Lina Khan ran into heavy conservative fire in March 2023 when she announced that the commission would send staff to Brussels to assist the DMA, and the Wall Street Journal Editorial Board It accused her of “aiding and abetting a foreign government.”
The White House, FTC, and Justice Department declined to comment on the matter.
Meanwhile, the US government has prioritized security issues, particularly the war in Ukraine and containing China, in recent talks with the European Union.
Regarding U.S.-EU relations, a U.S. industry executive said, “The situation in Ukraine has sucked all the oxygen out of us.” “The Biden administration has worked hard to align Europe and the United States on national security issues.”
When it comes to “fundamental” trade issues between the U.S. and Europe, such as Big Tech regulation, “there’s a lot of discussion going on around the differences,” he said. We don’t often actually roll up our sleeves and discuss the differences. ”
This approach has upset some who predict it will hurt U.S. tech companies.
“Unfortunately, the administration is not doing anything. It’s disappointing,” said Adam Kovacevich, CEO of the Chamber for Progress, an industry group whose partners include Apple, Amazon and Google. He believes the DMA will have a chilling effect on the types of services available to EU consumers and said the law “would be a somewhat disastrous development.”
But it has also received praise. Gene Kimmelman, who served as a deputy assistant attorney general at the Justice Department during the early days of Biden’s presidency, called the DMA a “watershed moment” that would create opportunities for European app developers and transparency for consumers. He praised the Biden administration for not imposing only the economic interests of U.S. tech companies.
“There’s often been a very nationalistic, pro-American, pro-corporate picture from the administration’s side in the Office of the U.S. Trade Representative, the Commerce Department, the State Department…but that hasn’t been the case with the Biden administration,” Kimmelman said. “They’re very open to a European approach and moving back from just trying to cover the big tech platforms.”
The Biden administration is continuing talks on the DMA with its EU counterparts mostly behind closed doors as it grapples with disagreements in Washington.
In late January, senior U.S. officials sat across a long table from their EU counterparts in the recently renovated Benjamin Franklin Room at the State Department. Secretary of State Antony Blinken said he would “focus on economic security,” referring to issues such as sanctions against Russia, countering China, and building resilient supply chains, and mentioned technology such as military chips and communications equipment. did.
The White House reading of the meeting omitted any mention of the DMA. However, when European Commission Vice-President Valdis Dombrovskis was asked about the matter at a press conference, he acknowledged that the DMA had featured “prominently” in closed-door discussions.
Kat Zakrzewski and Cristiano Lima in Washington and Shira Obide in New York contributed to this report.