From the moment Amazon founder Jeff Bezos, Meta boss Mark Zuckerberg, Apple leader Tim Cook, and Google chief Sundar Pichai were seen taking prime seats at the inauguration of President Donald Trump in January it was clear that the relationship of US Big Tech with the White House would be tighter in Trump’s second term.
Many of these executives had called Trump out during his first term on issues such as climate change and immigration.
This time around they were clearly in the house, led by SpaceX and Tesla boss Elon Musk, who spent nearly $300m helping the president’s campaign and has since taken on a key role as an efficiency tsar in the new regime.
However Trump’s ‘Liberation Day’ reveal of tariffs and the subsequent rollercoaster policy ride – currently enjoying a 90-day hiatus for negotiation – has pitched Big Tech into the heart of a brewing trade war.
The EU is ready to put pressure on the US by threatening to tariff its services, where it has a trade surplus with the EU, if negotiations in the ongoing trade war break down, European Commission President Ursula von der Leyen said last week.
“For them (Big Tech firms), Europe is a very attractive, rich market,” von der Leyen also toldGerman media Die Zeit this week, adding: “It has 450 million people who, in comparison with the rest of the world, have a high standard of living and free time. This means that, here in Europe, there is enormous turnover and huge profits in digital services. No firm wants to lose access to this market.”
Hitting tech companies may be one of the options the Commission is exploring, while US president Donald Trump has announced a 90-day pause in the trade confrontation.
We take a look at the variables that impact the decision to include measures that will hit tech groups such as Meta, Google and Facebook.
1. Big Tech decisions
The landmark Digital Services Act (DSA) and Digital Markets Act (DMA): EU laws that tackle illegal content online and digital market distortion, have come under fire by tech giants ever since the Republican administration of US President Donald Trump took office, claiming the rules are unfair.
Peter Navarro, a senior Trump advisor, openly accused the bloc of waging “lawfare” against US Big Tech. In response, the EU said it will “not make any concessions on its digital and technology rules” as part of any trade negotiations with the US.
The European Commission has begun several probes under the DSA since the rules entered into force some years ago, but none of the investigations have been wrapped up, despite setting for some cases a non-binding deadline for 25 March this year.
An investigation for non-compliance with the DMA should be closed soon regarding Apple and Meta, waiting for a political decision to be taken at the Commission’s highest level.
“We are currently working on the adoption of final decisions in the short term,” Commission’s spokesperson Thomas Regnier said on Tuesday, while pointing that technical work was finished “for certain files”.
The Commission has underlined that these DMA probes are conducted strictly according to the regulation which does not discriminate against companies on the basis of country of origin. But the fact that most of those under its scope are American means that the decisions are now seen through the lens of the brewing trade war, regardless.
By contrast the DSA probes are not yet that advanced: with only an investigation into X — for allowing dark patterns and failing to curb the spread of illegal content – making significant progress. A significant factor that could complicate X’s case is the platform’s CEO Elon Musk, who is also a government adviser to Trump.
Musk could be held personally liable for a possible multi-million euro fine for a breach of the DSA, depending on the business model of X, the Commission said late last year. This means the Commission would also account for the revenues of companies such as Space Exploration Technologies and Neuralink. DSA fines may total up to 6% of the company’s annual global revenue.
It’s worth noting that US authorities actually may see eye to eye with the European Commission on competition however. The Federal Trade Commission – the US antitrust enforcer – accuses Meta of abusing its dominant position through the purchase of WhatsApp and Instagram. A trial opened before US judges on 14 April.
2. Starlink
Elon Musk’s Starlink could also be caught in the trade war. Several EU countries are growing wary of their reliance on Musk-owned satellite infrastructure and are looking to reduce strategic dependency. Whether this is a form of retaliation in the tariff tussle or for other reasons it means that Starlink has been sucked into the orbit of the trade war.
Currently, Musk’s Starlink satellites have played a vital role in maintaining internet connectivity in Ukraine following Russia’s invasion. Some EU member states, such as Poland, have helped fund Starlink terminals to support Ukrainian resilience on the ground.
However, despite its prominence in conflict zones and emergency response, Starlink remains largely absent from European households. The system is generally more expensive and slower than traditional broadband operators on the continent, making it an impractical option for most consumers.
Brendan Carr, commissioner at the US Federal Communications Commission, recently told the Financial Times that Europe risks being caught between competing technological superpowers. “If Europe has its own satellite constellation then great, I think the more the better. But more broadly, I think Europe is caught a little bit between the US and China. And it’s sort of time for choosing,” he said.
The EU is attempting a third way by trying to develop its own alternatives. The IRIS2 project is in the pipeline, and Eutelsat is also ready to edge out Starlink – however those projects might take time.
3. Member states call for digital tax
Member states including France and Germany have indicated they’re thinking about including digital services in the EU’s response to US tariffs.
French economy minister Eric Lombard suggested hitting Big Tech’s use of data through regulation in an interview with French media. Data is regarded as “black gold” for AI and the European market’s size makes it alluring to US Big Tech. Von der Leyen also signalled the EU was ready to introduce a tax on digital advertising revenues. A digital tax was under discussion at the OECD, until Trump torpedoed any chance of a deal last January.
The EU could also hit Big Tech by deploying the “nuclear option”: its anti-coercion tool. This would allow the EU to withdraw licences and intellectual property rights from foreign companies.
However, taxing US tech services would raise similar questions to Trump’s original tariff barrage: it could inflict more self-harm on Europe than on its intended targets and raise awkward questions about the bloc’s tech sovereignty and resilience.
The COVID-19 pandemic and Russia’s aggression in Ukraine led the Commission to push for a “tech sovereignty” agenda in a bid to become less dependent on overseas regions.
But years later there’s little to show for this. Most cloud services remain in the hands of a few US players, for example. And when it comes to chips – widely used for the car industry, space, defence and amongst other sectors – the EU has only some 10% of the world microchip market and is largely dependent on other regions in the world, figures provided by the Commission indicate.
A wider group of EU member states, the so-called D9+ countries – Belgium, Czechia, Denmark, Estonia, Finland, Ireland, Luxembourg, Netherlands, Poland, Portugal, Sweden, Slovenia and Spain – called to boost the EU’s digital competitiveness and tech sovereignty at a meeting last month.
The Dutch Minister for Economic Affairs, Dirk Beljaarts, said on Tuesday in response to parliamentary questions about whether the country wants to reduce its dependency on US tech, that it is looking to “strengthening the government’s digital autonomy” by focusing on developing a sovereign government cloud, as well as limiting “undesirable dependencies” on a few technology companies.
But as with the rest of Europe, targeting digital sovereignty remains an aspiration, and taking aim at US Big Tech in the meantime might mean cutting the ground from under your feet.
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