European technology regulations are slowing innovation, straining transatlantic relations, and creating opportunities for competitors such as China.

For years, the European Union (EU) has advertised its technology regulations as a model for the world. In theory, the EU believes its approach to be tough on Big Tech, protective of consumers, and committed to ensuring a fair and competitive digital ecosystem. But in practice, its expansive and interventionist regulatory regime hamstrings product design, substantially slows innovation, and places disproportionate burdens on the American companies who, of course, are responsible for delivering the innovations that built the modern digital economy. 

Some of the top US tech innovators have been forced to delay or withhold major technology features for European users because of uncertainty around compliance demands under the EU’s Digital Markets Act (DMA), a policy that imposes sweeping rules on large digital “gatekeepers,” forcing major platforms to open parts of their ecosystems to competitors and third parties under the guise of promoting competition. 

For example, the latest Siri AI capabilities will not initially be available to iPhone and iPad users in the EU because of how difficult and burdensome the regulatory environment has become. Many of the other latest features that are available to consumers elsewhere will be delayed or unavailable in Europe. This is not a win for consumers. Rather than fostering competition and innovation, it merely blocks consumers from choosing the products and services they prefer to serve the EU’s antiquated agenda.

EU Tech Regulation Is Becoming a Transatlantic Economic Flashpoint  

European regulations have turned product design into a legal compliance exercise by requiring innovative companies to determine whether those features will be deemed to advantage their own services, whether competitors must be granted access, and whether the product’s architecture must be redesigned to satisfy Brussels’ interoperability mandates before they can launch any new features. The security and privacy-related consequences are even more troublesome. The EU’s approach treats every closed system as anti-competitive. But privacy often depends on limiting access. And in most cases, a product is secure because third parties cannot reach into the device, the operating system, or the user’s most sensitive data.

The EU has given away its true motive by not evenly enforcing these regulations. These rules overwhelmingly fall on the largest and most successful American technology firms. Europe has every right to regulate its own market. But by repeatedly targeting only US companies with massive compliance costs, fines based on global revenue, and pressure to alter products worldwide, Europe has crossed a line that leaves Washington to conclude it is an attack on American economic security. 

The Trump administration has already made clear that it sees foreign digital taxes, fines, and regulatory burdens as a threat to American companies and US technological leadership. In fact, the White House has signaled that countries imposing discriminatory or disproportionate burdens on American firms should expect a response, including tariffs or other countermeasures. For example, President Donald Trump has warned France it would face 100 percent tariffs on French wine unless Paris eliminated its 3 percent digital services tax on US tech companies. The US stance has not changed. The EU’s policies lean toward economic extortion.

China Stands to Benefit from Europe’s Regulatory Burden on Innovation

This is a legitimate grievance that Brussels must take seriously. Otherwise, the EU risks turning the digital economy into a battleground between allies, and the only beneficiaries of that choice are our adversaries. 

China, for instance, is not waiting for Europe and the United States to finish litigating interoperability mandates. Beijing is moving aggressively to shape global technology standards, dominate key digital infrastructure, and export its own authoritarian model of digital governance. Europe’s current approach risks granting this exact opportunity to China and other adversaries.

Excessive Tech Regulation Could Leave Europe Behind

If every new technological feature must first survive a gauntlet of regulatory objections, forced access demands, and potential billion-dollar penalties, companies will simply delay products, limit functionality, or avoid certain markets altogether. European consumers will then receive a second-tier digital experience, not because American companies lack the ability to serve them, but because European regulators have made serving them too difficult and costly.

The United States and Europe do not need identical digital regulations. But the regulatory environment must not arbitrarily target US companies simply because they are the most successful. Moreover, the tech industries of both Europe and the United States must not give space for adversaries like China to grab market share. 

Instead, the EU must recognize that innovation is the product of investment, risk, engineering talent, intellectual property, and the freedom to build. And it cannot flourish under bureaucratic suspicion. Europe’s technology regulations will shape the future of transatlantic tech cooperation and innovation. Unless Brussels changes course, that future will be built somewhere else.

About the Author: Alexander B. Gray

Alexander B. Gray, a nonresident senior fellow at The Atlantic Council’s Scowcroft Center for Strategy and Security, served as deputy assistant to the president and chief of staff of the White House National Security Council (2019-21). He is the chief executive officer of American Global Strategies, a consultancy whose clients include technology firms.

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