US Bigtech Messed Up With EU Digital Markets Act

May 5, 2023
A new investigative report released by a top US senator reveals how US bigtech firms such as Amazon and Google influenced US policymakers to weaken the EU’s Digital Markets Act.

  • Revolving door hires help bigtech advance their position among US policymakers, report says
  • US officials acted to weaken legislative proposals in EU, South Korea

A new investigative report released by a top US senator reveals how US bigtech firms such as Amazon and Google influenced US policymakers to weaken the EU’s Digital Markets Act.

The 22-page investigative report released by Senator Elizabeth Warren shows that lobbyists of bigtech platforms met with high-profile US policymakers at the Office of the US Trade Representative (USTR) and the Department of Commerce to influence policies in their favour.

According to the report, the bigtechs relied on the infamous practice called "revolving door" to hire former top US government officials and use their insider connections to advance their positions in antitrust regulations and trade rules around the world.

Bigtech lobbyists have gained backdoor access to key US government officials and “weighed in behind closed doors while the public and Congress are left out”, Warren claims.

Emails between USTR, Katherine Tai and Google lobbyist and former deputy at the USTR Karan Bhatia show that, in August 2021, the US official reached out to Bhatia asking for her thoughts on Europe’s policy proposals regarding digital markets.

Bhatia proposed to meet to talk through “both opportunities and challenges given the aggressive (and sometimes divergent) agenda on technology that Europe is pursuing”, including working on “principles like non-discrimination, due process, and privacy/security”.

The EU first announced to rein in bigtech firms at the tail end of 2020 when it proposed legislation to create a framework for so-called gatekeepers to ensure they are not blocking access to a fair market for their competitors.

The Digital Markets Act (DMA) was signed into law in September 2022 but will only be enforceable in 2024 after the relevant authorities identified gatekeepers and gave them time to prepare for compliance.

Warren argues that the goals of the DMA are very similar to what Congress, Biden and federal regulators in the US have been advocating for. But despite this alignment, “both USTR and the Department of Commerce have acted to weaken or oppose the Act”.

At the Chamber of Commerce’s Transatlantic Business Work Summit in 2021, commerce secretary Gina Raimondo expressed “serious concerns” that the DMA would “disproportionately impact US-based tech firms and their ability to adequately serve EU customers, and uphold security and privacy standards”.

This echoed the same line of defence that bigtech had continued to push, despite the fact that the DMA would designate at least three European companies as gatekeepers as well.

In addition to Google lobbyist Bhatia, emails show that Amazon’s Arrow Augerot was also in contact with USTR officials in October 2021 to discuss the DMA.

Influence on in-app payment rules

Bigtech companies, particularly Apple and Google, have been challenged several times in recent years over their practices restricting in-app purchases on the apps downloaded from their app stores.

Regulatory and legal actions against the bigtech firms have spread across the world from the US to the UK, EU and South Korea.

In 2021, South Korea became the first country to legislate against in-app payment restrictions. The Asian country passed an amendment to its Telecommunication Business Act banning dominant platforms from forcing software developers on their app stores to use their payment systems.

Warren says that despite lawmakers and regulators on every level calling for similar regulations in the US, emails show that the USTR officials committed to “raising” the issue with their Korean counterparts “at the highest levels” and pushing the interests of Apple and Google.

In a secret August 2021 exchange between Google lobbyist Bhatia and ambassador Tai, Bhatia warned that South Korea’s proposed amendment would discriminate against American companies and asked for Tai to provide “attention to this issue and [raise] those concerns with the Korean government”.

In her response, Tai promised to “touch base with my counterpart(s) in Seoul” and to “make sure we and our teams are in touch with any insights we are able to glean”.

The report concludes with four recommendations aimed at addressing bigtechs’ influence on the USTR and Commerce Department.

Warren says trade policymakers should ensure that their actions “complement rather than conflict” with the Biden administration’s efforts to promote competition in the digital economy, regulate AI and protect online privacy.

“That means making crystal clear in any non-discrimination language that it is commonsense and not ‘illegal trade discrimination’ for the US government or any of our trading partners to regulate the largest tech platforms like Google, Meta, Apple, Microsoft, and Amazon, just because they happen to be headquartered in the US,” the report says.

Warren also presses the departments to commit to transparency in all public engagement and to implement “strong ethics reforms that will padlock the decades-long revolving door between large corporations and trade agencies”.

Commenting on the report, Amazon’s spokesperson said they advocate on issues that are important to their customers “like many other American companies with significant domestic investments and job creation” and that “includes maintaining open lines of communication with officials across all levels of government”.

VIXIO reached out to Google and Apple too but did not receive a response by the time of publication.

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