On September 19, 1796, George Washington published his famous Farwell Address to the nation. Toward the end of his address, Washington writes “Europe has its own set of primary interests, which to us have none, or a very remote relation… Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns.” While Washington is primarily referring here to the danger of European military entanglements, his advice may just as well have applied to any type of foreign entanglements that is not in America’s best interest.
Americans should keep this in mind the next time they hear lawmakers discuss replicating the EU’s new content moderation law known as the Digital Services Act (DSA). Part of a slew of recent regulations targeting major tech companies, the DSA is designed to establish a single uniform “transparency and accountability framework” for online platforms across the EU. The goal is to end the supposed wild west of the internet by empowering the European Commission to launch investigations into tech companies that it believes have either exhibited problematic behavior or failed to adequately defend consumers from dangers online. Unfortunately, this framework creates more problems than it solves.
For starters, the DSA includes a long list of obligations that companies must abide by to stay in the good graces of the Commission. Most of these are overly vague and poorly defined. For instance, companies are expected to mitigate “systemic risks” such as “disinformation” while also safeguarding “freedom of expression.” Not only does this require a difficult balancing act, but it also requires companies to have consistent definitions of controversial subject matters, many of which do not exist.
Other obligations are equally precarious, such as bans on self-preferencing and targeted advertising. While well intentioned, these measures are likely to have a disastrous impact on the customer experience and the ability of companies to tailor content to the subjective preferences of users.
Perhaps most concerning, the DSA will not just impact Europe. That’s because the DSA specifically targets large online platforms and search engines that have at least 45 million active monthly users. Most companies that meet such criteria are large tech companies with global operations. Therefore, any company that seeks to remain compliant with European law will have a strong incentive to streamline its operations.
The DSA also disproportionally targets American companies. Among the 19 companies that the European Commission has already singled out and charged with having “specific responsibilities to make the internet safer,” 16 are American. While skeptics may attribute this unlikely coincidence to these companies’ large size, the fact is that American companies will be disproportionally impacted by European regulations. Few, if any of them, will want to lose access to a market that has over 100 million more people than the U.S.
That hasn’t prevented the European Commission from establishing stiff penalties for potential violators of the DSA. For instance, should a company be found noncompliant, they may be fined up to six percent of their global annual revenue. Such penalties seem unnecessarily punitive and designed to force any company that has reservations about the new law to quickly fall in line. That’s unfortunate for American consumers who will see the negative impact of the DSA firsthand in the form of fewer quality social media options and more restrictions on their First Amendment Rights.
Strangely, some American politicians have begun enthusiastically championing the same kind of draconian European-style regulations here at home. As noted in a recent LA Times article, politicians like Hilary Clinton have praised Europe’s crackdown on big tech for what she considers to be the amplification of “disinformation and extremism.” Others have taken things a step further and specifically called for the break-up of big tech.
This type of support for European-style regulations is not just naïve but also dangerous to consumers and American leadership in the technology space. American companies have established themselves as the envy of the world precisely because up until now, America has been careful to avoid replicating Europe’s disastrous regulatory environment. American lawmakers and regulatory agencies would do well to remember Washington’s wise words when he wrote that America’s “detached and distant situation invites and enables us to pursue a different course.”
