Why America should not adopt Europe’s model for tech regulation

The European Union is barreling toward the final stages of enacting sweeping new rules in antitrust and speech that are gerrymandered to target only America’s most successful technology companies. But the painful reality is that by damaging America’s ability to innovate, these policies would be a self-inflicted wound that threatens the national security of the United States and its extensive network of European allies. Policymakers in the U.S. (and the United Kingdom) should treat the EU’s approach as a cautionary tale, not as a model to emulate.

On July 5, the European Parliament held its final vote on the Digital Markets Act (DMA) and Digital Services Act (DSA), two pieces of regulation that apply only to the largest American technology companies. European leaders insist these bills will boost competition in digital markets, but that claim ignores the numerous headlines, corporate earnings reports, and shifts in market share that are testament to the fierce multinational competition that exists in the digital space.

Given Europe’s poor track record of building its own Silicon Valley and venture capital industry, it makes little sense for the United States to take a page from its playbook when it comes to regulating an industry as vitally important to our national security and economic prosperity as technology. Yet alarmingly, bills that follow Europe’s regulatory lead are making their way through Congress.

Of greatest concern are a package of anti-innovation bills that closely resemble the DMA: They discriminate against specific U.S. tech companies to the benefit of our adversaries, crack down on so-called “self-preferencing” practices without imposing the same restrictions on European and Chinese companies, and threaten our national security by slowing the development of critical strategic technologies — artificial intelligence, quantum and others — that are essential for protecting our homeland and combatting our foreign adversaries.

Numerous U.S. senators have expressed concerns about the bills’ impacts on national security, privacy, and our ability to compete. Yet proponents of these bills have done little to resolve those concerns. With the U.S. engaged in a high-stakes battle with our adversaries — namely, China — for global tech leadership, we must tread carefully on passing a DMA-like bill that would kneecap the American companies that are best positioned to help America win the innovation race.

National security officials in the Biden administration have made this connection. In fact, a leaked memo revealed that the White House’s National Security Council (NSC) expressed concerns about the national security implications of the EU-like proposals, since they might require U.S. tech companies to provide competitors with sensitive company information. The NSC concluded that “there is a concern that the DMA may override existing protections for intellectual property rights, including protection for trade secrets.” Just a few weeks ago, FBI Director Christopher Wray delivered a speech calling for U.S. companies to aggressively protect their intellectual property now against the wide-scale espionage efforts of foreign adversaries or risk “[losing] your competitive advantage” to countries such as China.

Additionally, while the bills would restrict American tech companies in many critical areas, including search results they can show, foreign adversaries would not be held to the same standards. The rampant propaganda campaign by Russia and China in Ukraine shows the troubling national security implications of forcing U.S. companies to downrank certain search results while those of our geopolitical rivals are left unregulated.

In approving the DMA, the EU ignored the multiple warnings of security experts, including those within the U.S. government. If Congress does the same, it could force U.S. tech companies to expose American data and intellectual property to foreign rivals.

The bottom line: If America follows in Europe’s footsteps, we’ll jeopardize our security — and theirs — at a time when we depend on strong American companies to safeguard our collective cybersecurity, data, and intellectual property protection. The winners will be China and Russia, who will not hesitate to exploit the loopholes created by the legislation at a moment of acute competition between our economies. 

It matters greatly which country builds the future. Congress needs to ensure the U.S. doesn’t inadvertently surrender our technology and innovation edge.

Frances F. Townsend was the third U.S. Homeland Security Advisor, from 2004 to 2008, and serves as a national security advisory board member for the American Edge Project.