Report from the Financial Times
In Brief – The European Commission has slowed its Digital Services Act (DSA) investigation of X to allow the contentious US-EU trade negotiations to reach a resolution before their regulatory decision is finalized. The Commission hoped to announce their decision before their summer recess, but that deadline is almost certain to pass as the matter is tied to the trade talks. Earlier this year, while Elon Musk was a central figure in the Trump Administration, he was also involving himself in highly controversial political affairs in Europe. Several European leaders called for Musk to face sanctions for alleged election interference, and the European Commission widened their ongoing DSA investigation of the platform to include how X might be improperly boosting or recommending election content.
Context – If a full-scale trade war breaks out between the US and the EU it won’t be caused by European tech regulation, but Big Tech’s treatment in Europe is deeply enmeshed in the bilateral trade standoff. The EU runs a major surplus with the US in goods, but the US has a big, although smaller, surplus with Europe in services trade. Digital services are a big part. Retaliation against those services exports, especially digital services, is on the table if the trade conflict escalates. Top US officials also argue that EU “gatekeeper” regulation, meaning the DMA, so-called censorship of online free speech in Europe, meaning the DSA, and European digital services taxes, all discriminate against American businesses. Financial penalties for Apple and Meta in the first round of DMA investigation, announced in April, were likely restrained to avoid exacerbating the situation, but new rounds are coming. The Google DMA decision is also due. EU officials repeatedly say they will not walk back their digital rules, and they almost certainly won’t. But tech is a lightning rod and creative negotiators will be negotiating. While the era of the Trump-Musk alliance seems fully over, online free speech remains an explosive issue in the Trump Administration and with influential conservative populists in the US who have built ideological alliances in Europe.