At the beginning of the summer, France announced that it would grant almost three billion euros in support to build a semiconductor factory in France. A couple of weeks later, Germany was said to have agreed on a ten billion euro support package for the semiconductor manufacturer Intel to build a chip factory in Germany. Italy, struggling for the same factories, has earmarked more than four billion euros to attract the semiconductor industry.
The growing importance of the technology industry can now be seen as a new wave of protectionism – also in the European Union, which swears by free competition.
– The geopolitical situation has led to the fact that the EU has begun to use its regulatory power more and more for techno-protectionist and industrial policy use of power, says the professor of law at Columbia University Anu Bradford In an interview with .
Bradford, who hails from Tampere, has had a long academic career in the United States. Bradford, who did his PhD at Harvard, has worked as an assistant professor at the University of Chicago Law School, and for the past eleven years he has taught at Columbia University. The career can also accommodate a short stint in Brussels at a legal office.
Bradford considers the EU’s industrial policy development to be worrying for Finland. Finland is not able to meet the state subsidies of countries like France or Germany. In addition, Finnish companies depend on an open and fair internal market.
Bradford, who wrote the recent Digital Empires book on digital regulation, sees that the trade war wrapped around technology has caused both the EU and the US to play Beijing’s game. We have started talking about technological sovereignty, and state interventions are no longer considered as bad as before.
– Technological and economic policy is currently viewed much more from the point of view of national security. Of course, it promotes protectionist attitudes and changes the policies of states, Bradford points out.
Protectionist attitudes are not limited to semiconductors, but similar thinking has crept into the regulation of artificial intelligence and digital services. Digital regulation has become one part of superpower politics.
– This is an economic and geopolitical, but also an ideological battle. Opposite are completely different worldviews and values, says Bradford.
Great power politics limits digital regulation
Bradford’s previous book The Brussels Effect – How the European Union Rules the World (2020) dealt with Europe’s role as a global regulatory power.
After this, the focus of regulation has shifted strongly to the digital world. In his book Digital Empires, Bradford goes through ideological struggles related to digital regulation, or their different levels.
Bradford divides the digital world into three empires. There is the United States, which relies on market-led regulation, the EU, which approaches regulation from fundamental legal principles, and China, which relies on a state-led model.
All these empires fight against each other, but in the big picture, the views of the US and the EU are close to each other and can be seen as forming a line of open democratic states. Bradford points out that in recent years there has been an awakening in the United States that blind faith in market forces and self-regulation of technology companies does not work.
However, realizing this does not guarantee that the United States will follow Europe in digital regulation.
– These companies are the most important tool of the United States in the competition against China. The concern is that if one’s own technology giants are regulated too strongly, it may negatively affect the US’s own ability to compete against China in economic development, geopolitics and national defense, Bradford reflects.
At the same time as the digital empires measure each other, they try to balance with their own technology giants. In this competition, there is no single winner and things are not black and white, but everything is a constant balancing act and compromise.
Bradford sees that the Western line can lose the battle for the future of democracy in two ways. Either it loses the horizontal battle against the Chinese model or it loses the vertical battle against its own technology companies.
– I hope that we as citizens understand what these options mean for our own rights and the structures of our democratic society, says Bradford.
In the digital world, the EU must be more than just a regulator
In Europe, the regulation of technology companies and their products has been seen as important for years. The background has been concern about how American technology companies affect the European economy, European society and the rights of Europeans.
The legalities of the digital world were the first to challenge European values. For a long time, the opportunities brought by technology seemed to support American values, the most important of which are free speech and free markets.
– In Europe, on the other hand, there is a deep historical understanding of what it means if the protection of privacy is breached. In Europe, there has always been a very strong perception that it is very important that our own information remains under our control, Bradford points out.
The digital economy hit people’s privacy, so it is natural that the role of regulator fell to the EU. In a way, digital regulation has become one of the EU’s brands.
However, the role of the regulator may take too much attention.
– I hope that focusing on regulation would not take away all the political energy and momentum from all the other pillars of the information society, which our legislators should also focus on building.
At the moment, it seems that these pillars are being built in the EU with state support. According to Bradford, this is not the right direction if the EU wants to challenge the United States and China in the production of technology, and not only in the regulation of technology.
– I really don’t see that we would be able to subsidize our Technology Industry to the required level through state subsidies alone. It requires completely different investments in innovation policy, says Bradford.
The EU needs a unified digital market
Bradford does not subscribe to the popular claim in Silicon Valley that the EU’s digital regulation is the reason why successful technology companies have not been born here in the same way as in the United States. Instead, he sees the problem in the fact that the EU has not developed a unified digital internal market.
– The EU has not been able to create a genuine internal market in its own area of strength.
In addition to the digital economy, the capital market in the EU is still fragmented, which makes financing growth companies more difficult than in the United States, where the capital market is more unified and deeper.
Attitudes and legislation could also be improved, according to Bradford. In Europe, risk-taking is still not encouraged in the same way as in the United States.
– In the United States, there is a different mentality towards risk-taking, which is extremely important in terms of technological innovation. American legislation, culture and thought model give better opportunities for trying difficult things, notes Bradford, who has lived in the United States for a long time.
However, the biggest challenge is the skills shortage. Europe cannot attract the world’s best talent to build their companies here. The technological success of the United States is largely based on the work of immigrants.
On the other hand, the US political system has drifted to the point where it can only regulate its technology industry through presidential executive orders that can be revoked by the next president with a single signature.
Reforms are therefore needed on both sides of the Atlantic.
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