© Matt Kenyon

Opportunities and challenges are often one and the same. So it is at the moment with the US and Europe.

The European Commission wants to grab a “once-in-a-generation” opportunity to reset the transatlantic relationship now that US president Donald Trump is on his way out. President-elect Joe Biden’s administration will want a partnership with Europe to be at the heart of a reinvigorated alliance of liberal democracies that will present an economic and political alternative to China.

However, the 27-nation EU and the US continue to be at war with each other over technology regulation, trade and corporate taxation. Brussels is right that it is time for a reset. But getting there will require thinking about these issues all together, rather than in silos.

Start with tech regulation. The commission is considering new legislation that would take on the most entrenched Big Tech firms, such as Facebook and Google. The idea is to correct the failures of existing antitrust legislation, since competition policy focused on consumer pricing is not built for the era of digital barter. The US Department of Justice’s Google case may begin to shift that, but it will take years to complete.

The commission’s proposals, which would be subject to the approval of EU governments, would define the role and responsibilities of digital “gatekeepers”. They would force them to make their systems more open and interoperable, subject them to algorithmic audits and impose sanctions, such as the divesting of assets, for repeat offenders. 

Silicon Valley is already lobbying hard against the proposals. Companies are counting on the incoming Biden administration, which will include a number of tech-friendly officials from Barack Obama’s time in the White House, to help them stand up to Europe. It shouldn’t. One of the huge risks for the new administration is that it will be seen as too cosy with concentrated corporate power. Witness the cries already coming from the left about some of Mr Biden’s appointees who have backgrounds in private equity. 

Individual appointees should be judged on their own merits. If we didn’t let anyone from either the finance or the technology industries into the new administration, we would be the poorer for it. Take Gary Gensler, a former Goldman Sachs executive, who is now Mr Biden’s chief markets adviser. He cleaned up derivatives trading while at the Commodity Futures Trading Commission during the Obama years.

That said, this is a crucial moment for the new president to send a signal about how he plans to control Big Tech as an industry — or not. European regulation is not perfect, but it is far better than what the US, with the exception of California, has right now, which isn’t much.

Each side needs a swift agreement on how to regulate cross-border data flows, given that digital trade is the only sort that is expanding. The European proposals overlap with the DoJ’s antitrust case in that they both focus on how big platforms can trap customers into choosing their own products and services — an argument Google contests. This should be the start for a new transatlantic approach to curbing the monopoly power of the sector, which has only grown during the pandemic.

It could also be part of the west’s response to China’s digital surveillance state. It makes perfect sense for the US and the EU to create a shared set of standards for 5G and the internet of things, which will massively increase the depth and breadth of digital data over the next few years, using homegrown equipment from companies such as Qualcomm, Nokia and Ericsson. China plans to be free of foreign technology and supply chains by 2035. It is time that the US and Europe created their own digital alliance.

It must be a diverse one. As we move from the consumer to the industrial internet, Europe, as a huge producer of potentially “smart” devices such as white goods and automobiles, has much to gain — but also to lose. For example, it is easy to imagine Google’s Nest division owning much of the data generated by a German washing machine or a French refrigerator, without the data sharing and portability that is a core element of the new EU proposals.

While the new rules are geared more towards the consumer internet, the EU’s policymakers are studying the internet of things and plan to put out a report on consumer-facing IoT by the middle of next year. European companies such as Siemens and SAP have a leg up when it comes to the business-to-business industrial internet.

Still, I would love to see any future digital competition solutions include public data banks in which anonymised personal and industrial data are shared, with independent oversight. It would be a way to ensure that companies of all sizes, as well as researchers and academics, could have equal access to data.

No less welcome would be a transatlantic agreement about how to tax data extractors — be they platforms, fintech firms or French luxury handbag makers. The public sector needs the revenue. And the Biden administration can’t afford to be as cosy with Silicon Valley as the last Democratic administration was.

The perception that the Democrats sold out to corporate interests is one of the reasons we got Mr Trump. Resetting trust in the public sector must also be an end goal for any new transatlantic relationship.

rana.foroohar@ft.com

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