The European Commission’s Drive to Maximize Revenue by Fining Tech Giants Erodes Europe’s Competitiveness

The opportunities for the European Union to cooperate with U.S. tech giants in order to grow its own tech leaders are being destroyed by European bureaucrats who want to take in as much money as possible.

Ronan Murphy, Director of the Tech Policy Program at the Center for European Policy Analysis (CEPA), sums up the outcome of the European Commission’s barrage of fines against tech giants and argues that the steps will be more damaging than beneficial.

The European charges a sequence of fines to other countries’ tech companies. The latest salvo was two new fines for Google, totaling EUR 890 million, making it the third U.S. tech firm fined by the European Union under the Digital Markets Act (DMA) after Apple (EUR 500 million) and Meta (EUR 200 million). There were fines for Chinese firms ByteDance (EUR 530 million), AliExpress (EUR 550 million), and Temu (EUR 200 million) under the General Data Protection Regulation (GDPR). The European Court of Justice has upheld previously imposed massive fines against Google and Apple.

Google was found in breach of the DMA provisions on self-preferencing in search results and ‘steering’ users to its own products in the Google Play store. Two separate decisions and two separate fines. The company has 60 days to change its search results and its store or face further penalties – including a ‘periodic penalty of up to 5% of its total worldwide turnover.’

U.S. Trade Representative, Ambassador Jamieson Greer, was quick to respond: ‘The EU often claims that it is looking for stability and predictability in our trading relationship, but these actions are driving massive uncertainty for U.S. exports of goods and services to Europe.’ There are calls in Washington for the USA to retaliate via tariffs. The European Commission is unrepentant. More DMA actions are forecast.

This could lead to U.S. retaliation that could be much harder on Europe’s weakening economy and its far less developed tech companies.

The European Commission’s demands will hurt European consumers as well. ‘To comply, we are having to strip away real-time search features Europeans love – like instant pricing and direct availability for hotels, flights, and restaurants – and dismantle safety protections on Google Play,’ Google Global Affairs chief Kent Walker said in his statement.

The fines came on the day Google announced expansion plans in Europe. Such decisions might be different if the fines continue, distracting the USA and Europe at precisely the moment when China’s tech threat is most acute. Just a week before the Google fines, Chinese AI firm Moonshot released Kimi K3, an open-source frontier AI model touted as a rival to OpenAI and Anthropic’s most advanced models.

The fear remains that the EU will turn its digital regulations into de facto tax collection. Ambassador Greer called for a ‘ceasefire’ on DMA actions. The Commission is unlikely to stop here. And this new phase for the DMA will not make Europe more competitive.

Instead of focusing more on scaling its own tech champions and investing in tech innovation capacity, the European commission is multiplying hurdles for tech giants’ operations in the European Union. Bureaucratic barriers are being erected before European companies that train their AI models on publicly available data, and U.S. companies are harassed with fines. This will ultimately leave Europe without modern artificial intelligence and make it fall even farther behind the USA and China.

Original publication: https://cepa.org/article/europes-tech-regulation-regime-enters-a-new-phase/