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…

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…

Global companies are not the only ones to feel the Brussels effect. Governments, too, are increasingly looking to the EU when drafting their own rules for the digital economy. To date, nearly 120 countries have adopted privacy laws, and most of these resemble the EU’s data-protection regime. These countries range from large economies and regional leaders such as Brazil, Japan, South Africa, and South Korea to midsize economies like Colombia and Thailand. For its part, the US has thus far been reluctant to emulate the EU, but even the US-based tech giants concede that the global momentum has shifted in Europe’s favor…

By the end of this year, the EU is expected to unveil its new Digital Services Act,which will include more aggressive rules governing the operation of Internet platforms. As such, the Brussels effect will likely continue to be felt worldwide, extending the EU’s influence – in the digital arena and beyond – long into the future.