The USA does not have to do a lot of head scratching

Taso Advisory
Apr Tue, 2021
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SUMMARY

  • The Biden administration is changing the US’s approach to key questions. This has led to talk of ‘radical’ changes to the US’s approach to policy areas like the environment, competition policy and tech regulation. 
  • Whilst these are changes from the previous administration, most of the ideas at play are not radical in the context of what is being discussed in Europe. The US is playing catch up and does not have to do a lot of head scratching to see where they could end up or the gaps in their work. 
  • Many of the ideas are already more mainstream. Europe gives an indication of where the US could end up on these key areas.

CONTEXT

The European Union’s (EU) relationship with the US is back on track - at least for now. Over the past months there have been appointments, visits and meetings which draw the Biden administration closer to the EU. This is in stark contrast to recent years. On the environment, digital policy and taxation, US officials are speaking closely and sometimes like-mindedly with their European counterparts.

Some of the commentary on recent changes in the US has raised how radically different Washington’s approach is. Whilst this is true in comparison to the previous administration, some of these changes are simply catching up with the debate. The EU’s positions are helpful indicators to see where the US could end up. 

COMPETITION POLICY

Lina Khan - who has advocated for a reformulation of tech antitrust rules - has been nominated as Commissioner of the Federal Trade Commission and Tim Wu - a prominent and outspoken tech critic - has joined the White House National Economic Council. These have been cast by some as a world change. 

It is certainly true that their appointments are significant. But many of their views are already quite mainstream in Europe. Wu’s refrain that “When an online service is free, you’re not the customer. You’re the product” is often repeated in Brussels competition circles, including by European Commission Vice President Magrethe Vestager. Khan’s advocacy for reconceiving consumer harm, whilst novel, was also picked up in advisory groups to the likes of the European Commission and are certainly part of the debate.

So what next for the US as it moves closer to the EU’s view on antitrust? First would be greater scrutiny of individual big tech companies. The European Commission has investigated all GAFA companies in the last ten years and continues to lead in the area. In the US, there are signs of closer attention like the FTC’s case lodged against Facebook but there are plenty more rocks to look under. 

Second would be more bespoke rules for big tech. If the EU’s experience is anything to learn from, the technicalities and delay of enforcing existing antitrust rules may not satisfy the political will for action. The next step would be regulatory intervention along the lines of the EU’s proposed Digital Markets Act, which will put in place ex ante rules to try and boost competition in digital markets.  

ENVIRONMENT

Similar conclusions can be drawn from US changes toward climate change. President Biden’s decision to rejoin the Paris Climate Accord was an important and symbolic first step. Second was the commitment to multilateral efforts to drive cooperation with the appointment of John Kerry to lead a diplomatic front. 

One challenge for the US is what to do if diplomacy does not deliver. There may be a temptation to adopt a different approach. The EU’s experience saw it take matters into its own hands, making climate policy a flagship area with initiatives like the Green New Deal and Carbon Border Adjustment Plan to try and incentivise others to follow their lead. These were pursued partly because the EU was alone during President Trump’s America and diplomacy stalled. If diplomacy comes up short then the US may use other instruments like trade policy.

DATA AND PRIVACY

Turning to tech regulation, the US is also playing catchup and is unlikely to want the EU to lead the way in setting a global approach as they did with the General Data Protection Regulation. Regardless of the assessment of whether GDPR was a success, it was a first step and has been emulated in other jurisdictions. .

It remains to be seen how the US approaches the next big tech regulation dilemmas currently being dealt with in the EU. The European Commission’s proposed Digital Services Act takes a swipe at content moderation, whereas the US is still relatively behind debating whether in principle s230 should be repealed or reformed. Similarly, the European Commission is expected to publish rules for Artificial Intelligence in April with little to show for a US approach of the same breadth. In both cases, the US has ground to catch up. It may be that the US believes that existing rules are adequate. If they don’t, then they will need to cover matters which the EU is working on like explainability and liability in AI, free speech vs content moderation, and responsibilities for those operating online. 

CONCLUSION

As the new US administration gets up to speed there remains a lot to be considered from the EU’s work on areas from antitrust, climate change and big tech regulation. The EU’s experience in these areas gives some indication of where the US could go and what could follow. Each has their own politics and mindsets. But the US does not need to do much head scratching to see what issues may present themselves. 

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