‘Digital Empires’: The China-EU-US Competition Over Tech Regulations

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‘Digital Empires’: The China-EU-US Competition Over Tech Regulations

Insights from Anu Bradford.

‘Digital Empires’: The China-EU-US Competition Over Tech Regulations
Credit: Depositphotos

The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy.  This conversation with Anu Bradford – Henry L. Moses Professor of Law and International Organization and director of The European Legal Studies Center at Columbia Law School, as well as the author of “Digital Empires: The Global Battle to Regulate Technology” (Oxford University Press 2023)  is the 386th in “The Trans-Pacific View Insight Series.”

Explain the competition between freedom and control in navigating competing regulatory models. 

The United States and China follow very different models for regulating the digital economy. The U.S. government embraces a market-driven model that prioritizes free speech and free internet whereas the Chinese government has adopted a state-driven model that seeks to advance social stability and preserve the political control of the Chinese Communist Party. This goal has required the Chinese government to implement a strict censorship regime. 

Many U.S. tech companies struggle to straddle between the United States’ demands for freedom and China’s demands for state control. To enter the Chinese market, these companies are required to acquiesce to Chinese censorship rules. However, such acquiescence to the Chinese government’s demands risks triggering a backlash in the U.S. 

Google, for example, discovered this when it decided to capitulate to Chinese censorship rules in order to operate its search engine in China. Following this controversial decision, Google’s U.S.-based customers, employees, and shareholders revolted at the idea that Google would compromise its liberal values and submit to the Chinese government demands, which eventually led the company to withdraw its search engine business from China entirely. This incident illustrates how a clash of values amplifies the ongoing regulatory battles and complicates the strategies for tech companies involved in these battles.

Analyze the waning global influence of American techno-libertarianism. 

For years, the U.S. actively promoted its internet freedom agenda abroad, urging countries to implement its market-driven regulatory model. This freedom agenda called for governments to refrain from regulating technology companies or censoring the internet. While this agenda initially gained traction around the world, over the past decade this agenda has largely failed, with digital regulations bourgeoning and internet censorship increasing across the world. 

Today, the United States’ market-driven regulatory model has become a victim of its own early success, triggering a backlash around the world. The free-for-all regulatory landscape nurtured tech giants that expanded globally and became too influential in the process. Over time, they began to overpower governments in terms of their economic, political, and cultural power, sparking significant concern among political leaders as these platforms continued to abuse their market power, infringe user privacy, and circulate hate speech, disinformation, and other harmful content. 

In response, a counter-movement to rein in these companies emerged, and foreign governments began to engage in efforts to repeal the private ordering these tech giants created under the protective shadow of the U.S. government’s internet freedom agenda. The EU’s response was to unleash a wave of regulation to further the goals of its rights-driven agenda; this agenda is now gaining popularity in many parts of the world.

Examine China’s exporting of digital authoritarianism through infrastructure. 

Gradually but decisively, China is gaining global influence by building digital infrastructures across the world. Country by country, Chinese tech companies – all with varying ties to the CCP – have built the physical components of digital infrastructures, provided critical telecommunications and e-commerce services, and supplied surveillance technologies along the “Digital Silk Road” that reaches across Asia, Africa, Latin America, and parts of Europe. Many receiving countries have welcomed Chinese technologies and accompanying regulatory standards as a path toward digital sovereignty and development. For authoritarian governments, an additional motivation has been to gain access to surveillance technologies that they eagerly use towards illiberal ends. 

The U.S. and its democratic allies have expressed serious concerns regarding the growing sphere of China’s influence yet face difficulties in countering the Chinese influence in the world, which is turning more receptive to authoritarian ideas. 

How is Brussels globalizing European digital rights through regulatory power? 

The EU is not known for developing the leading digital technologies, but it is known for generating regulations that govern those technologies. Today, the EU wields significant international influence through its digital regulations that have spread across the world. Through laws such as the General Data Protection Regulation (GDPR), the EU shapes the global business practices of leading tech companies, which often extend these EU regulations across their global business operations in an effort to standardize their products and services worldwide – a phenomenon known as the “Brussels Effect.” While the GDPR may be the posterchild of the EU’s global regulatory influence, the EU’s global regulatory influence is also felt in the domains of antitrust law and the regulation of online content. 

The EU is also a frontrunner in regulating artificial intelligence, with a comprehensive and binding AI Act being finalized still this year. This regulation may similarly be exported through the Brussels Effect. 

European digital regulations have not only been incorporated into tech companies’ global business practices, but often ingrained in legislation by foreign governments.  As governments are turning away from the American market-driven model, they are increasingly embracing the European rights-driven model as an alternative way to govern their digital economies. 

Some foreign stakeholders criticize the EU for engaging in regulatory imperialism and thus undermining the authority of governments to regulate their digital economies in accordance with their national interests and democratic preferences. At the same time, others welcome the EU’s global regulatory power and the effect it has in countering the U.S. tech companies’ global influence.

Assess how competition among  the American, Chinese, and European digital powers are shaping the future of global digital governance. 

Governments around the world are making important choices on how to govern their digital economies in the coming years. The three digital empires – the U.S., China, and the EU – are each reaching across the global marketplace, expanding their own sphere of influence and shaping the future of global digital governance. 

Governments face a choice on whether to welcome the Chinese infrastructure or join the U.S.-led effort to restrict the access of companies such as Huawei to their markets, hence influencing the battle between the American market-driven model and the Chinese state-driven model. These governments must also determine whether they join the EU in its efforts to rein in U.S. tech companies, thus siding with either the U.S. or the EU model.  

In addition, all countries, tech companies, and digital citizens are affected by the intensifying tech war between the U.S. and China. This escalating conflict has significant economic, political, geopolitical, and ideological ramifications. Inevitably, this conflict is also pushing the global digital economy towards greater decoupling while casting a long and dark shadow over the once-optimistic vision of a global, integrated digital economy that spans across jurisdictions and connects the world as opposed to risks breaking it apart.