By Doug Kelly, CEO of American Edge Project

The technology and innovation industry’s rapid growth and unparalleled significance have placed it squarely in the crosshairs of overeager regulators in both the U.S. and Europe. While cloaking their actions as protecting competition, recent moves by these regulators reveal a troubling pattern: a willingness to bypass established laws and norms to advance an increasingly ideological agenda. These misguided actions not only threaten innovations coming out of the technology sector, but we are now seeing the impact it’s having on potential lifesaving technologies in the bio-tech and healthcare sectors too. Unfortunately, this unchecked regulatory overreach will not only undermine innovation and hurt consumers, but it also risks ceding our leadership across a number of industries to China. 

One recent example of this overreach is the European Union (EU) and Federal Trade Commission (FTC) actions around the recent Illumina-Grail deal.

The European Union’s Extrajudicial Actions Against U.S. Companies 

This week, EU antitrust authorities ordered California-based Illumina to divest its recently re-acquired cancer detection company, Grail, even though this was a vertical merger in which the companies didn’t directly compete with one another, and even though Illumina has offered a number of binding guarantees to address any competitive concerns. 

It’s bad enough that European regulators can order two American-based companies to separate, but concerningly this could harm progress on life saving cancer care and detection innovations. Grail’s technology can reliably detect 50 cancers at early stages with a simple blood draw, and can detect the 12 most deadly cancers with 60% accuracy, leading to earlier treatments and greater survival rates. 

But the EU’s path to undoing the Illumina-Grail deal is controversial on a number of fronts. First, the merger didn’t meet the necessary revenue thresholds to be subject to an EU merger review. But rather than allowing the deal to close, enforcers tapped into an EU law that allows member states to request, even at the commission’s prompting, review of any particular deal. In short, the EU, unable to review the deal based on traditional thresholds, found a backdoor method to scrutinize Illumina’s acquisition.

The implication of this action is vast: it significantly broadens the commission’s reach, setting a precedent that could potentially stifle innovation and deal-making in the future, particularly for American companies. In fact, to further advance its anti-innovation agenda against U.S.-based companies, the EU recently opened up an office in San Francisco seeking “to promote EU standards and technologies, digital policies and regulations and governance.”

The FTC Actions Against U.S. Tech Companies

In the United States, the FTC has acted in a similar manner. Though an administrative law judge for the FTC found a lack of evidence to challenge the Illumina-Grail deal, the decision was overruled by FTC leadership, citing a need to encourage innovation. But this is counterproductive, because if companies fear unpredictable regulatory backlash – e.g., the goalposts keep being moved – the drive to innovate and enter strategic partnerships could diminish.

A key question is who benefits from this overzealous oversight? Certainly not the American or European consumers, who stand to gain from technological advancements, health care improvements, and the economic growth spurred by successful mergers and acquisitions. Instead, while the West squabbles over regulatory semantics, countries like China are fast-tracking their technological advancements, and poised to take the lead in the global tech race.

Moreover, the current regulatory approach doesn’t just undermine innovation; it also contributes to an atmosphere of distrust with regulators. Illumina’s challenge to not only the merits of the FTC’s case but also to its very structure underscores a sentiment felt by many in the industry: that regulators are overstepping.

Technological innovation isn’t just another sector – it’s the very backbone of our national security, economic prosperity, and our values. There must be balance to regulatory actions because overzealous regulation, especially when it side-steps established legal norms, will hurt the very consumers it purports to protect and offer competitors, like China, an undue advantage. U.S. lawmakers must stand up for U.S. innovation at home and abroad against overzealous regulators.