The Biden administration sent two official letters of protest to Brussels raising concerns, but it stopped short of pushing the issue, people familiar with the matter said. There were differing views within the administration about whether it should be Washington’s role to rally around Big Tech’s business interests.
There was also a war in Ukraine, a rising challenge from China and a host of other issues for which Biden administration officials wanted European cooperation. They were not going to derail the transatlantic relationship over Big Tech.
“The Biden administration has made an intentional decision, and concerted effort, to work with the European Union,” said Jorn Fleck, the senior director of the Europe Center at the Atlantic Council. “Not just ‘Europe’ writ large, not just through NATO which is the traditional go-to, not just through the bilateral relationships with key countries in Europe, but specifically also with the E.U.”
Europe’s Digital Markets Act, or DMA, is now fully in force, with Thursday being the deadline for companies to comply. That has required six tech companies — all but one American — to make significant changes to their offerings in the E.U., whose 27 member states make up the world’s second-largest economy after the United States.
Perhaps most notably, Apple will start to allow third-party app stores onto iPhones for E.U. users, cracking open its ecosystem. Google will present Android phone users with a “choice screen” so they can easily switch away from Google’s web browser and search engine, if they wish. Meta will allow other messaging services to connect to WhatsApp and Messenger in the E.U. and give users the option to delink their Facebook and Instagram accounts.
Microsoft is allowing E.U. users to disable Bing web search in Windows. Amazon will ask E.U. customers for consent for use of their data for ad personalization. TikTok is allowing E.U. users to download a full trove of their data.
GET CAUGHT UP
Summarized stories to quickly stay informed
“It’s the first major jurisdiction to try regulating digital platforms,” said Yale economist Fiona Scott Morton, an American who was appointed the European Commission’s chief competition economist last year, but withdrew amid backlash that she wasn’t European. She said the DMA “takes the approach that the way to get more competition is to have competition on the platform rather than necessarily trying to replace the platform.”
What drew outrage from U.S. industry is that five of the six companies subject to DMA regulation are headquartered in the United States: Amazon, Apple, Microsoft, Google’s parent company Alphabet and Facebook’s parent company Meta. The sixth, TikTok’s parent company ByteDance, is headquartered in China.
E.U. officials say they applied neutral criteria to determine which companies were powerful enough to count as internet “gatekeepers,” the designation the law assigns to the entities it covers.
A European Commission spokesperson said regulators will move quickly if companies flout the DMA, with fines of up to 20 percent of a company’s global revenue for repeat offenders. “We are ready to take decisive enforcement action making use of the full toolbox available under the DMA,” the spokesperson said, adding that any noncompliance cases will be finalized within a year.
The immediate effects for U.S. consumers are limited, though economists say the E.U. shift could lead some other nations to follow suit.
In the United States, there have been efforts by some lawmakers to pass a law similar to the DMA, but they have so far been unsuccessful, with antitrust regulation viewed with greater skepticism here than in Europe. Congress is considering reducing by $45 million the requested budget for the Justice Department’s antitrust division, which has two anti-monopoly court cases against Google and an investigation into Apple underway.
Abusing a dominant market position has long been illegal in both the United States and the E.U. The European Commission slapped Apple with a nearly $2 billion fine Monday in a separate antitrust probe, for issues raised by music streaming service Spotify. But the DMA provides much greater detail for the internet sector, banning gatekeepers from preventing smaller rivals from building applications on an equal footing, making it difficult for users to switch services or amassing personal data across multiple services without getting users’ permission.
Those tougher provisions are proving problematic for the Biden administration, whose concerns about the law include worries that its provisions requiring access for third-party app stores could increase cybersecurity vulnerabilities. But with Biden’s Federal Trade Commission and Justice Department staking out strong positions on combating the consumer harms of Big Tech at home, the administration is divided on the issues.
That has made administration officials wary of speaking on the issue, after coming under fire both for being too critical of the DMA — and too supportive of it.
Commerce Secretary Gina Raimondo was put through the wringer by progressive lawmakers in 2021 after she said she had “serious concerns” about the DMA, with Sen. Elizabeth Warren (D-Mass.) blasting her for carrying water for Big Tech. FTC Chair Lina Khan stumbled into a conservative firestorm in March 2023 when the commission said it would send an official to Brussels to assist on the DMA, with the Wall Street Journal editorial board accusing her of “aiding and abetting foreign governments.”
The White House, the FTC and the Justice Department declined to comment for this story.
Meanwhile, Washington has been prioritizing security issues in recent talks with the E.U., especially the war in Ukraine and containment of China.
“The Ukraine situation has sucked the oxygen out of the room,” said a U.S. industry executive of the U.S.-E.U. relationship. “The Biden administration has worked very hard to get the Europeans and the U.S. on the same page when it comes to national security type issues.”
When it came to “bread and butter” trade issues between the United States and Europe, such as Big Tech regulation, he said, “there’s a lot of papering over one’s differences. There’s not a lot of actual rolling up one’s sleeves and hashing out those differences.”
That approach has upset some, who predict a negative impact on U.S. tech companies.
“Unfortunately, the administration has been hands off, and it’s disappointing,” said Adam Kovacevich, CEO of the Chamber of Progress, a trade association that counts Apple, Amazon and Google as partners. He said he believed that the DMA will have a chilling effect on the types of services available to E.U. consumers and that the law was “going to unfold somewhat disastrously.”
But it has also earned praise. Gene Kimmelman, who was the Justice Department’s deputy associate attorney general in the early part of Biden’s presidency, calls the DMA a “watershed moment” that will open up opportunities for app developers in Europe and provide transparency for consumers. He praises the Biden administration for not pushing just U.S. tech companies’ financial interests.
“Very often from the U.S. Trade Rep, from the Commerce and State Department side of administrations, you get a pretty nationalistic, pro-U.S.-company framing of things … that hasn’t been the case with the Biden administration,” Kimmelman said. “They have been very open to the European approach, and to backing away from just trying to run cover for the big tech platforms.”
As it grapples with the disparate views in Washington, the Biden administration has kept its discussions over the DMA with E.U. counterparts largely behind closed doors.
In late January, senior U.S. officials sat across a long table from their E.U. counterparts in the State Department’s recently refurbished Benjamin Franklin Room. “We’ll be focusing on economic security,” Secretary of State Antony Blinken said, mentioning issues such as Russia sanctions, countering China and building resilient supply chains — a reference to technologies like chips and telecommunications gear with military applications.
The White House readout of the meeting omitted mention of the DMA. But when European Commission Executive Vice President Valdis Dombrovskis was asked about it at a news briefing, he acknowledged that the DMA had featured “prominently” in their closed-door discussions.
Cat Zakrzewski and Cristiano Lima in Washington and Shira Ovide in New York contributed to this report.