US and Europe risk confrontation on key tech issues

Europeans and Americans decry dangerous disinformation. Both worry about keeping digital markets competitive. Both believe tech platforms must assume additional responsibility for the content they host. And both see China as a dangerous rival.

Yet, as speakers at the recent CEPA Forum demonstrated, European and American policymakers are responding at different speeds to these challenges – raising the prospect of conflict. It’s imperative that both sides take a step back, slow down, and compromise.

Success is achievable. Since the invasion of Ukraine, Brussels and Washington have moved fast to find common ground on export controls against Russia. They have patched up a disagreement over transatlantic data transfers. On both sides of the Atlantic, ambitious public-funded Chips programs are being launched to spur semiconductor production. 

Both sides perceive a threat from an authoritarian Beijing. “When you look at what China has achieved in building technologies, be it 5G or AI, we face a serious competitor,” Ylli Bajraktari, director of the Special Competitive Studies Project and author of a report identifying “the technology areas where we must act by 2030.”

Yet differences remain substantial. While Europe’s attitude to China has hardened in recent months, it continues to see Beijing as a potential partner and wants to retain its own room for maneuver between Asia and America. Germany recently approved a Chinese investment in its largest port in Hamburg.

From the European perspective, the US threatens to veer into protectionism. The new American infrastructure bill subsidizes US electric cars, but not European ones. When it imposed sanctions on sales to China of advanced chips, the US used its leverage to pressure European companies to stop selling as well. 

This unilateralism should stop. Europe has a point that the US is moving too fast to destroy the Chinese chip industry, no matter what the economic consequences. “Right now Europe is squeezed between two extreme poles on developing technology,” said Danish Tech Ambassador Anne Marie Engtoft Larsen. “We cannot be left on the test board in between these two great players.”

For its part, Europe should listen to US concerns. Over the past year, it has moved ahead with the landmark Digital Markets Act, which targets a handful of large US digital platforms, from Amazon to Microsoft, and imposes significant restrictions on their businesses.  While Gerard de Graaf, the director of the European Union’s new Silicon Valley office, told CEPA that the US and Europe “see largely eye to eye” on the objective of “keeping the Internet safe,” he acknowledges that the EU has moved unilaterally.

On emerging technologies such as artificial intelligence, Americans are right to worry that Europe is moving too fast. Europe is in the final stages of legislation. Little consideration has been given to its impact on innovation, Bajraktari complained. “Europeans haven’t done a cost-benefit analysis,” he said. Instead of rushing ahead, we should sit down together” before “you start regulating.” He suggests the EU-US Trade and Transatlantic Council would be an appropriate venue.

Europe also fails to consider security risks in its regulations. Google recently published an insightful white paper detailing European tech rules that it fears will open doors to hackers.

Instead of just complaining, the US must offer constructive alternatives.  Washington must offer its own vision for regulating AI and other cutting-edge technologies. “We have the European model and the China model,” says Bajrkatari. The US should come up with its own model.

Bill Echikson is the Acting Director of the Center for European Policy Analysis (CEPA)’s Digital Innovation Initiative.