The launch of the General Data Protection Regulation (GDPR) in 2018 has set the wheels in motion for the EU to implement new and novel ways to bind and restrict global tech giants.
Through an ever-growing catalogue of directives, rulebooks, and regulatory demands, enforced through the ever-present threat of sanctions, the EU has taken up the mantle of the world’s ‘preeminent tech regulator’. And as of December 2024, the ‘Radio Equipment Directive’ is set to further upset the balance of power between tech firms and national governments.
The directive has made headlines as Apple will no longer be able to sell iPhones that feature Apple’s bespoke ‘lightning cable’ in EU markets. Taken alone, this directive may appear essentially harmless. However, the reality is that this should be seen as the latest (and most certainly not the last) market intervention by trigger-happy Eurocrats on a crusade against an industry supposedly run amok.
In only a few short decades, the global tech industry has fundamentally changed the scope and horizon of human interconnectivity. This change has been the result of the innovative arms race between various tech firms hoping to draw consumers away from rivals. Delivering products and services more feature-rich, of greater quality, and a lower price than others. The impact of free market relations has been nothing short of revolutionary for societies worldwide, and no signs thus far indicate that the march of progress is due to stop anytime soon.
Luckily for EU citizens, none of this appears to be news to their leaders. Most recently, at the World Economic Forum’s meeting in Davos, Commission President Ursula von der Leyen reaffirmed the EU’s desire to “get ahead of the competition” by “making Europe more investment and innovation-friendly.”
But, those who are also eager to see Europe at the forefront of the continued digital revolution see Brussels’ array of market interventions sending all the wrong signals to the very industry they must attract. Halting a service here or issuing a fine there may prove insufficient to motivate firms to withdraw from European markets entirely – Europe is far too important a market for that to occur – but the environment for venture capital and pre-existing industry giants to lay down their roots is spoiled by intrusive government oversight and interference. And as the EU’s other directives have already inspired Brazilian, Japanese, and Indian policymaker’s tech regulations, Europe’s position as the world’s ‘preeminent tech regulator’ is already affecting industry players far beyond the EU’s territory.
While EU representatives have correctly identified some problematic areas in the digital space that should be addressed, (such as citing data privacy concerns and children’s online safety) this sense of mission is increasingly being seen by industry players as excessive. Apple pushed back at the charging directive in a statement, along with commissioning an independent study. This report casts doubt over the efficacy of the directive to achieve its goals. Apple emphasised how the work of their organisation, and tech firms alike, should remain free from intense government oversight. Being free to compete against one another in an unrestrained market, the impetus for firms to innovate consumer goods and services is strongest.
Alongside Apple, another sectoral giant in Brussels’ crosshairs is social media behemoth, TikTok. Europe’s concerns surrounding TikTok predominantly deal with cybersecurity threats. However, given the EU’s active reappraisal of its relationship with China, TikTok may face fines in the range of 4 per cent of their annual turnover due to alleged violations of the EU’s ‘Digital Services Act’ and ‘Digital Markets Act’.
These issues emerged just as TikTok’s parent organisation, Bytedance, had decided to open an office in Belgium. In a bid to replicate the expansion strategies of other tech giants, Bytedance sought to enhance their already strong presence in Europe, adding onto their 5000+ pre-existing employees on the continent. Yet, for an app with such widespread popularity and as significant a corporate presence as TikTok to nonetheless provoke the ire of Brussels, other players in the social media space will undoubtedly approach their future dealings within the EU with great trepidation.
Should the EU successfully reshape the balance of power between tech giants and national governments, forcing them to comply or forego business in one of the world’s largest and most prosperous markets, it will position itself as the preeminent global tech regulator. This reputation could undermine the Commission’s grand ambitions to overhaul Europe’s tech infrastructure and position itself at the centre of the digital revolution.
While Ursula von der Leyen is correct in her belief that “Europe has everything” to succeed in the rapidly changing world of tech, Europe’s vast talent pool, world-beating research facilities, and strong industrial capacities may suffer if industry players are deterred by a suffocating regulatory environment. Counterproductively, Brussels’ actions could deter start-ups and pre-existing industry players from establishing new or expanding their present operations within the bloc. A dire state of affairs made all the worse given Europe’s already lacklustre growth forecasts in the coming years.
