The rise and fall of the Brussels effect
The term “Brussels effect” was coined by Anu Bradford, a law professor at Columbia University, to describe how the EU’s strict regulations on data protection, competition, consumer rights, and environmental issues have become the de facto global standards, as companies comply with them to access the lucrative European market.
The Brussels effect has been especially evident in the tech sector, where the EU has imposed hefty fines on tech giants like Google, Facebook, and Amazon for violating its antitrust and privacy rules. The EU has also pioneered new legislation such as the General Data Protection Regulation (GDPR), which grants users more control over their personal data, and the Digital Services Act (DSA), which aims to hold online platforms accountable for the content they host.
The EU’s regulatory clout has been boosted by the lack of a coherent digital strategy from the US, which has been more lenient and fragmented in its approach to tech regulation. The EU has also benefited from its soft power and reputation as a defender of human rights and democracy, which have made its norms more attractive and legitimate for other countries to follow.
However, the Brussels effect is now facing serious challenges, as the global tech landscape becomes more competitive and multipolar. The EU’s regulatory power is being undermined by four main factors: the rise of China, the resurgence of the US, the backlash from the tech industry, and the limits of its own capacity and coherence.
The rise of China
China is emerging as a rival to the EU in shaping the global digital order, as it develops its own tech capabilities and standards. China has become a leader in fields such as artificial intelligence, 5G, and e-commerce, and has a huge domestic market that gives it leverage over foreign tech companies. China has also created its own regulatory framework for the digital economy, which reflects its political and economic interests and values.
China’s digital model is based on a high degree of state control and surveillance, a low level of data protection and privacy, and a preference for national champions over foreign competitors. China has imposed strict rules on data localization, cybersecurity, and content moderation, and has blocked or restricted access to many foreign online services, such as Google, Facebook, and Twitter. China has also promoted its own tech standards and platforms, such as Huawei, Alibaba, and TikTok, in other countries, especially in the developing world.
China’s digital model poses a challenge to the EU’s regulatory power, as it offers an alternative that is more appealing to some countries that share its political system or economic development goals. China’s model also threatens the EU’s values and interests, as it undermines human rights and democracy, and creates security and economic risks. The EU has been wary of China’s tech influence, and has taken steps to limit its presence and access in the European market, such as excluding Huawei from its 5G networks, imposing sanctions for human rights violations, and screening foreign investments.
The resurgence of the US
The US is also reasserting its role in the global tech arena, as it adopts a more assertive and coherent digital strategy under the Biden administration. The US has recognized the need to compete with China and cooperate with the EU on tech issues, and has taken measures to strengthen its innovation and regulation capacities.
The US has increased its public and private investment in research and development, especially in emerging technologies such as artificial intelligence, quantum computing, and biotechnology. The US has also ramped up its antitrust and privacy enforcement against tech giants, and has proposed new legislation to update its outdated digital rules. The US has also re-engaged with its allies and partners, such as the EU, on digital governance, and has sought to establish common standards and norms on issues such as data flows, taxation, and cybersecurity.
The US’s digital revival could be an opportunity for the EU to collaborate with a like-minded partner on shaping the global digital order, and to balance China’s tech influence. However, it could also be a challenge for the EU’s regulatory power, as the US could try to impose its own preferences and interests on the EU, and to persuade other countries to follow its lead. The EU and the US still have significant differences and disputes on tech issues, such as the role and regulation of big tech, the protection and transfer of personal data, and the taxation of digital services.
The backlash from the tech industry
The tech industry is another source of resistance to the EU’s regulatory power, as it seeks to protect its profits and autonomy from the EU’s strict rules. The tech industry has been lobbying against the EU’s digital regulations, and has challenged them in courts and in public opinion. The tech industry has also tried to influence the regulatory agenda and process, by offering its own proposals and solutions, and by participating in consultations and dialogues with the EU institutions and member-states.
The tech industry’s backlash could limit the effectiveness and impact of the EU’s regulatory power, as it could delay or dilute the adoption and implementation of its rules, and reduce their acceptance and compliance by the companies. The tech industry’s backlash could also erode the EU’s reputation and legitimacy, as it could portray the EU as a protectionist and anti-innovation actor, and as an obstacle to the development and diffusion of beneficial technologies.
The limits of the EU’s capacity and coherence
The EU’s regulatory power is also constrained by its own capacity and coherence, which affect its ability to design and enforce its rules, and to project its influence externally. The EU faces several challenges in this regard, such as the complexity and uncertainty of the digital environment, the diversity and divergence of interests and preferences among its member-states and institutions, and the lack of resources and expertise to monitor and sanction the tech companies.
The EU’s capacity and coherence challenges could hamper the effectiveness and impact of its regulatory power, as they could result in inconsistent and incomplete rules, and in weak and uneven enforcement. The EU’s capacity and coherence challenges could also undermine its reputation and legitimacy, as they could expose the EU to criticism and complaints from the tech companies, other countries, and its own citizens.
The EU’s regulatory power in the tech sector is facing serious challenges, as the global tech landscape becomes more competitive and multipolar. The EU needs to adapt and adjust its strategy and approach, in order to maintain and enhance its influence and leadership in the digital economy. The EU should pursue a balanced and flexible strategy, that combines competition and cooperation, regulation and innovation, and values and interests. The EU should also seek to improve its capacity and coherence, by investing more in research and development, fostering a common vision and agenda among its member-states and institutions, and enhancing its dialogue and engagement with the tech industry and other stakeholders.
