By Saxby Chambliss and Kent Conrad
The rapid ascent of China poses profound economic and national security challenges for the West in the 21st century. However, overzealous regulation of American technology firms by European allies, as exemplified by the European Union’s Digital Markets Act, threatens to undermine U.S. technological leadership and cede advantage to Beijing’s burgeoning tech sector.
Case in point: the EU recently designated six companies as “gatekeepers” under the DMA. Alarmingly, five of the six gatekeepers — Alphabet, Amazon, Apple, Meta and Microsoft — are U.S.-based, and 21 of the 22 platform services requiring compliance are owned by American companies.
The law enacts strict compliance requirements and draconian fines that will force many of America’s most innovative and successful companies to reduce risk-taking and rein in research and development budgets. It will undercut America’s vibrant startup ecosystem by disincentivizing larger, more mature companies from acquiring rising competitors and providing them with the capital and experience needed to grow and expand. It will mandate onerous compliance rules that force our companies to spend an estimated $22 billion to $50 billion a year in administrative costs. And it will require our most prosperous and innovative companies to share proprietary technology and data, even with Chinese competitors. This is reckless myopia given China’s voracious theft of intellectual property. America already hemorrhages more than $500 billion a year in stolen trade secrets to Beijing. Now Brussels practically invites more Chinese piracy.
The likely fallout includes reduced revenue growth, diminished innovation, stifled economic growth and a strategic gift aiding China’s geopolitical ambitions. This should serve as a sobering cautionary tale for U.S. policymakers considering proposals for expansive new regulations on American technology leaders.
Technology serves as the cornerstone of America’s economic might and is indispensable for national security. Every day, U.S. entrepreneurs and tech firms create new products and services that generate jobs, accelerate economic growth — and enhance how we work, live and connect. This will only grow more consequential as emerging capabilities like artificial intelligence, quantum computing and biotechnology fundamentally transform society in the coming years.
Yet, over the past several years, we have seen some in Congress and other positions of power seek to enact sweeping, anti-innovation policies that would restrict the types of products certain companies can develop, dictate how they can compete, and prevent them from growing and acquiring cutting-edge technologies.
This is the wrong approach.