Selim Ibraimi- Despite the good news from the recent talks in Scotland between the US and the EU on reasonable tariffs, the US on Tuesday again threatened the EU with higher tariffs over european rules on the digital economy. But senior EU officials said otherwise, explaining that the US government is overreacting by imposing new tariffs against the EU over the Digital Market Act (DMA) and the Digital Services Act (DSA).
“It is the sovereign right of the EU and its member states to regulate economic activities on its territory,” said European Commission (EC) spokeswoman Paula Pinho. EU technology spokesman Thomas Regnier further said that the EU “firmly rejects” the idea promoted by US President Donald Trump that the rules only target american companies.
“The Digital Services Act does not take into account the ‘colour’ of a company, the jurisdiction of a company,” Regnier said. He pointed out that the last three EU enforcement decisions were against companies based in China, focusing on giants Ali Express, Temu and TikTok. But what exactly is the digital economy and what do these acts that the EU is using against the US, China and companies that aim, in some cases, to promote bad practices against consumers and european countries represent?
In the EU, the Digital Market Act and the Digital Services Act entered into force in 2022 to regulate this important area of the economy of this century. The acts aim to protect the economies of EU countries from unfair competition from powerful american companies such as Apple, Amazon, Google and Chinese ones. While the Digital Services Act and the Digital Market Act were presented to european lawmakers at the same time, with different goals.
The acts include all the demands and concerns of European states towards foreign companies in the european market. Otherwise, the Digital Market Act focuses on promoting fair competition in digital markets, while the Digital Services Act prioritizes transparency, user security and accountability for online platforms”.
According to a report by the European Commission, the main purpose of the Digital Market Act is to regulate the behavior of so-called big tech companies within the European market and beyond. According to the regulation, the Act covers eight different sectors, which it calls basic platform services. Due to their presence, the European Commission has considered online search engines such as Google Search to be quite present, starting from online intermediary services Google Play Store, Apple’s App Store); social networks (e.g. Facebook, X, Linkedin); video sharing platforms (e.g. YouTube etc.); communication platforms (e.g. WhatsApp, Gmail); advertising services (e.g. Google Ads); operating systems (e.g. Android, iOS); cloud services, etc. In this regard, the Department of The US Department of Defense also took some measures by eliminating all presence of chinese applications in defense cloud services.
So, it is a major effort in this area, not only between the US and the EU, but also China to penetrate deeply not only the digital economy, but also the security systems of China’s adversaries. Moreover, the Digital Market Act in the era of artificial intelligence will make the online economy even more difficult.
According to a report published by the European Center for International Political Economy (ECIPC), the two european regulatory acts impose significant costs, estimated at 71 billion euros for european businesses and up to 97 billion dollars for american firms, assuming a 5 percent increase in technology spending. These costs, according to the report, stem from requirements such as transparency in algorithms, content moderation and changing business models.
To balance american and european requirements, the Trade and Technology Council (TTC) The US-EU was established years ago to promote cooperation and avoid misunderstandings between Washington and Brussels. The heavy measures resulting from european rules for regulating the digital market are seen as protectionist by some american companies and the american government itself. Meanwhile, the EU, according to recent reports, has ignored american criticism. At a time when China and India are facing high tariffs imposed by the US, the visit that Indian Prime Minister Narendra Modi is expected to make to China is a warning to the US and the EU. Joint forces can prevent something worse in the future for transatlantic relations; otherwise, China and India will change everything, even in this digital economy that is competing with the US and european countries. Meanwhile, in the Balkans, we see some attempts to align with EU policies in this area, and for promote the importance of the rules of the aforementioned acts, but in reality, states are far from implementing the rules to protect businesses and citizens.
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