The European Union (EU) and most of its 27 member countries have an abysmal record of spawning new and innovative technology companies that could improve the lives of its people. Despite that, some U.S. regulators are pushing hard to apply the EU’s practices here.
The Federal Trade Commission (FTC) and the U.S. Department of Justice’s Antitrust Division are already working closely with their counterparts in the EU against U.S. companies. Under just one law – the Digital Markets Act – the EU could confiscate tens of billions of dollars annually from large U.S. tech companies.
After initially trying to fly under the radar on this international collaboration and then being called to the carpet by both Democrats and Republicans in Congress, FTC Chair Lina Khan and her supporters are now doubling down on work with EU regulators. Against the backdrop of two U.S. House of Representatives committees’ investigations, the spin now is that it is in U.S. companies’ best interests to have harmony in U.S. and EU regulation, even if one is much worse.
That absurdity will be unpacked in a bit, but first, a look at the numbers shows that the U.S. should have nothing to do with the EU’s regulatory policies.
Of the world’s 50 largest technology companies by revenue, only five are in EU countries and the highest-ranking one is 24th worldwide. The EU does have one more tech company than Taiwan, but the four Taiwanese companies’ revenues double the EU companies’ revenues ($326 billion vs. $153 billion). Of the top 50 companies, 25 are headquartered in the United States.
The EU is also where tech and venture capital ideas go to die, as shown from an analysis which the Lexington Institute prepared from Organization for Economic Cooperation and Development (OECD) data.
The U.S. attracts more than 10 times as much venture capital investment as the European Union, demonstrating that it provides the lifeblood for new technologies and innovations.
According to the OECD, the 27 EU countries attracted $14.5 billion in venture capital investments in 2022, the latest year for which figures are available. For the U.S., it was $188.0 billion. While the EU has 110 million more people than the U.S., it attracted just 7.8 percent of venture capital investments. In fact, the EU cannot even match the venture capital investments in Israel, which stood at $15 billion and has seven million people.
FTC Chair Khan has faced intense criticism for her close working relationship with Margrethe Vestager, the EU’s Commissioner for Competition. Although the FTC’s primary mission is to protect U.S. consumers, Chair Khan has also made international trips to Barcelona, Berlin, and Paris.
At an April 8 meeting in Washington, D.C,. with European and other international regulatory enforcers, FTC Commissioner Rebecca Slaughter tried to take some of the heat off FTC Chair Khan and defend the FTC’s work with European enforcers.
Commissioner Slaughter said, “It is not good for international business enterprises to deal with contradictory legal systems in different parts of the globe. That creates uncertainty, compliance challenges, and myriad layers of complexity.”
Businesses are fine when it comes to dealing with different legal regimens. They do so in 50 states and have dealt with different international rules since trade began.
What is different now is that the U.S. is helping the EU enforce much stricter regulations than the U.S. has – and against American companies. Thus, the most stringent laws against a company will be applied more universally.
The U.S. government should protect U.S. companies against arbitrary and capricious fund seizures, as the EU has shown it is willing to do.
It would be one thing to embrace Europe’s regulatory scheme if it somehow produced prosperous companies that provided lower-cost products and services to consumers as U.S. tech companies do. However, by stifling innovation, the EU has less competition and is far more hostile to consumers, new businesses, and business competition than the U.S. is.
FTC cooperation with European regulators should cease and desist immediately, or the costs and disruptions to the U.S. economy could be high and completely unnecessary.
