Europe’s Tech Regulation Regime Enters A New Phase

Big fines are now coming thick and fast from Brussels. Washington is watching.

It has been a bruising few weeks in Europe for US tech firms. The latest salvo was two new fines for Google, totaling €890m, making it the third US tech firm fined by the European Union under the Digital Markets Act (DMA) after Apple (€500m) and Meta (€200m). This comes quickly on the heels of the European Court of Justice upholding massive historic fines against Google and Apple. In sum, the EU has now fined US firms €1.59 billion under the DMA. There were fines for Chinese firms ByteDance (€530m), AliExpress (€550m), and Temu (€200m) under the General Data Protection Regulation (GDPR), and fines related to the Digital Services Act (DSA) now total €1.28 billion.

The fines certainly do nothing to further transatlantic harmony. US 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 US exports of goods and services to Europe.” Greer also cited recent state-backed support for Airbus: “the EU continues to target the most competitive US companies.” But Ambassador Greer did stop short of initiating a 301 action against the EU – others want that to happen.

The latest fine is the first for Google under the DMA. The company has protested the decision and stated it will damage the user experience for European users and could undermine privacy and security. There are calls in Washington for the US to retaliate via retaliatory tariffs. The European Commission is unrepentant. More DMA actions are forecast.

The Commission’s statement on the new fines had a business-as-usual air. 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.” Commission Vice Presidents Ribera and Virkkunen chimed in with strongly worded quotes. The Commission statement did acknowledge “constructive dialogue” with the company and “good progress” on changes the Commission requires.

Google itself is likely to appeal the decision, citing impact on search results quality and the knock-on impact for small businesses in the EU. “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. There are security and privacy concerns. Google, Apple, and Meta pour billions into cyber protections that users benefit from. The data sharing requirements in the DMA have been condemned by privacy advocates and national security experts.

The fines came on the day Google announced expansion plans in Europe. Such decisions might be different if the fines continue, distracting the US and Europe at precisely the moment when China’s tech threat is most acute. Just a week before the DMA fines, Chinese AI firm Moonshot released Kimi K3, a soon-to-be fully open-source frontier AI model touted as a rival to OpenAI and Anthropic’s most advanced models. While a preliminary evaluation of Kimi K3 by the US and UK’s AI vetting shops found the model “performs significantly below the most recent frontier cyber-capable models,” Moonshot’s latest “DeepSeek moment” clearly shows how quickly China is moving in the tech race — and that this is not the time for more tech-driven division between allies like the US and Europe.

The Commission has previously rejected accusations of anti-US bias out of hand, pointing to the other US companies that have launched complaints against Google and Apple and benefit from its decisions. A US version of the DMA, the “App Store Freedom Act,” was discussed on Capitol Hill this week. One of its authors, Representative Kat Cammack, offered a distinctly European view when introducing the bill: “For too long, consumers and developers have borne the brunt of anti-competitive practices on major app store marketplaces.”

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. The EU’s stated endgame is “innovation opportunities,” but this new phase for the DMA will not make Europe more competitive, and Europe will be better served by focusing more on scaling its own tech champions and investing in its capacity for tech innovation.

We at the CEPA have long focused on the opportunities for a positive, pragmatic tech agenda for both sides. There is still room for such an agenda. As China’s highly subsidized tech sector continues to find more gaps to exploit in global markets, there is a real need for this agenda.

*Ronan Murphy is Director of the Tech Policy Program at the Center for European Policy Analysis.

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