Europe stunned the world with its ‘regulatory tsunami’ last year—but AI and Trump will add new snags in 2025

Posted by Admin January 3, 2025 World

For the past decade, Big Tech formed an ultrapowerful corporate lobby that couldn’t be touched. Then Europe turned everything upside down.

Nearly every sprawling tech empire entered the European Union’s line of fire in 2024. Its regulatory clampdown ended an era of unfettered growth, forcing them to mend their ways or face millions (or billions) in punitive charges.

Technically, the EU’s Digital Markets Act (DMA) and Digital Services Act (DSA) kicked off in 2022, although companies were given until earlier this year to comply. Once that deadline was lifted, it was time for action—and the EU spared little time.

The DMA labeled the U.S.’s biggest (and the world’s biggest) tech companies as “gatekeepers,” who must be subject to strict competition rules.

Apple and Meta have been fined €1.8 billion and €800 million, respectively, as the EU ramps up its policing of too-big-to-crack-down-on tech firms. In another antitrust case, Google was fined by the EU’s Court of Justice for nudging its own shopping recommendations to users, giving it an unfair advantage.

The EU has also threatened to fine X, formerly Twitter, as much as 6% of its global annual revenue (or potentially more if Elon Musk’s entire business empire is considered) over alleged illegal content on its platform that violates the DSA.

The bloc’s AI Act has broken ground as the most comprehensive rule book on AI so far.

All the acts and their acronyms can feel like a lot to keep up with for mere mortals, even for the tech world with its strong legal teams. And yet critics fear they will impede innovation.

“You want to foster innovation and growth, and arguably, a hands-off approach to regulation encourages that,” said Geoff Blaber, CEO of CCS Insight, a tech research firm. “The flip side is, if you’ve got a small number of very dominant companies, it might be encouraging innovation amongst those companies, but it’s probably not encouraging innovation more broadly.”

The myriad of regulations has made Europe a regulatory thicket that tech firms are struggling to navigate, potentially leaving consumers without access to the latest technology.

For instance, Apple delayed the rollout of its flagship generative AI tools, Apple Intelligence, in Europe owing to privacy and security concerns that clashed with the DMA’s anti-competition measures. Meta did the same with its AI model, too.

Europe is a significant market, with nearly 450 million people, so circumventing them isn’t a permanent solution. The region could also use the tech presence, as it lags behind other economies in that realm.

But given the new regulations, it also looks like a ring of fire that Big Tech cannot escape.

To be sure, the U.S. has been amping up its Big Tech scrutiny, too, signaling an agreement that the group’s power needs to be checked. Earlier this year, a federal court called Google “a monopolist,” resulting in a possible breakup of the search giant.

“Globally, or certainly between the U.S. and Europe, there is now agreement on the need for regulation. Where there’s disagreement is how that gets implemented and who implements it,” Blaber said. “I think the DMA is a positive thing; you could argue it’s 15 years too late.”

The timing is an added complication: Companies have gone decades without any regulatory oversight, and now, they’re expected to operate differently and realign to a new standard.

During Donald Trump’s first term as president, the Justice Department and Federal Trade Commission had been investigating Amazon, Apple, Meta, and Google for their monopolistic practices. As he was campaigning in the lead-up to the 2024 election, Trump vowed that he wouldn’t let the EU take tech companies for a ride after he got a call from a worried Tim Cook, the CEO of Apple.

“[Cook] said something that was interesting,” Trump noted on the PBD Podcast aired in October. “He said they’re using that to run their enterprise, meaning Europe is their enterprise. I said, ‘That’s a lot … But, Tim, I got to get elected first, but I’m not going to let them take advantage of our companies—that won’t, you know, be happening.’”

In early December, Trump’s tone was different as he accused Big Tech of “using its market power to crack down on the rights of so many Americans.”

As a new year begins, as well as a new Trump presidency with tech magnate Elon Musk as his confidant, could the conversation around regulation change in any way?

“In Europe, there’s definitely a feeling that competitiveness, that the regulatory tsunami, needs to be calmed down,” Bill Echikson, a senior fellow at the Center for European Policy Analysis (CEPA), told Fortune. He admits that what a Trump presidency or Musk’s political power could mean for a U.S. approach to the subject is still unclear.

However, the U.S. would have more weapons in its arsenal if the EU ramped up tech scrutiny in a way that peeves Trump. In September, incoming Vice President JD Vance suggested that the U.S. might halt NATO funding if the EU fines X.

“The political direction is competitiveness over regulation,” Echikson said, adding that the EU’s consideration of a new Digital Fairness Act could be a litmus test for how the two regions spar on regulation.

In CCS Insight’s annual trend forecast report, the group predicts that 2025 could be the year the U.S. and Europe’s divergence on regulatory norms becomes even more stark, particularly in how they regulate AI.

“I think the key one would be the AI Act, which is getting a lot of criticism as frightening away AI deployment from the big American companies and AI investment from the European startups,” Echikson said.

The European Commission’s new competition head is Teresa Ribera, who plans to maintain a tight grip on regulation. This includes a possible Google split to rein in the company’s market dominance. With new leadership on both sides of the Atlantic, a new order is sure to reshape 2025—it just remains to be seen how far-reaching its impact is.

This story was originally featured on Fortune.com