As Europe Clamps Down on Tech Innovation, U.S. Policymakers Should Take the Path of More Competition and Less Government

The highest court in the European Union (EU) issued a ruling Thursday that will threaten the ability of tech companies to continue delivering new services to consumers, businesses, and governments, which in turn will harm U.S. taxpayers in more ways than one. Furthermore, it could allow regulators in individual European countries to determine what content Americans can access on the internet. 

It is imperative now more than ever that U.S. lawmakers across the ideological spectrum resist domestic and international calls to bring the heavy hand of government regulation down on tech companies large and small. Instead of placing onerous burdens on information services that, ironically, will only hamper competition, policymakers should protect and strengthen laws that allow technology companies to innovate (like Section 230 of the Communications Decency Act, which NTU has written about before).

The EU ruling stems from a case that began in Austria, one of the 28 EU member countries. According to a background of the case written by Daphne Keller of the Stanford Center for Internet and Society, Austrian politician Eva Glawischnig-Piesczek sued Facebook in an effort to compel them to remove a post about her that she found offensive.

The post used strong language, calling Glawischnig-Piesczek a “[l]ousy traitor,” “corrupt,” and a member of a “fascist party.” However uncivil these comments may be, they contained no apparent threats, and would not be out of place in a Facebook post from an American user about Donald Trump or Hillary Clinton.

According to a Court of Justice of the European Union (CJEU) summary of the case, an Austrian court found the Facebook post “to be harmful to the reputation of Ms Glawischnig-Piesczek … which insulted and defamed her,” and asked CJEU to determine whether EU’s Directive on electronic commerce prohibits countries from ordering global providers like Facebook to remove content that is “identical” or “equivalent” to content previously deemed illegal.

CJEU ruled on Thursday that:

  • Countries can order tech companies to remove content that is “identical” to content previously deemed illegal.

  • Countries can order tech companies to remove content that is “equivalent” to content previously deemed illegal. However, tech companies can only use “automated search tools and technologies” to identify this equivalent content, since requiring “independent,” presumably human, assessments of equivalent content would lead the EU to violate its Directive on electronic commerce. Article 15 of that Directive prohibits EU countries from imposing a general obligation on service providers (like Facebook) “to monitor the information which they transmit or store.”

  • Countries can order tech companies to remove identical or equivalent content on a worldwide basis, not just in the country where the case originated.

The two-page summary of the ruling betrays a wider sense of confusion and frustration - among tech companies, experts, and policymakers - over the difference between “identical” and “equivalent” content, the distinction between automated monitoring and human monitoring, and the global implications of the CJEU’s ruling.

Facebook noted that “national courts will have to set out very clear definitions on what ‘identical’ and ‘equivalent’ means in practice.” Stanford’s Keller had an excellent analysis of the legitimate privacy, effectiveness, and free-speech concerns that come with automated monitoring of content. And UK civil rights group Article 19 was alarmed that “[t]his [ruling] would set a dangerous precedent where the courts of one country can control what internet users in another country can see. This could be open to abuse, particularly by regimes with weak human rights records.”

Besides these concerns, however, NTU also worries this is a significant case of regulatory overreach that will harm American consumers and taxpayers.

The EU Court of Justice has ruled that Facebook and other tech innovators can be forced to comply with each individual EU country’s rules, regulations, laws, and standards. While the Court caveats that country rules must be “consistent with the rules applicable at international level,” it leaves it to those countries to comply with international laws. It’s easy to see how this decision could allow overzealous regulators in European countries to police speech beyond their borders and place onerous burdens on tech companies large and small.

There are legitimate debates happening in the U.S. and Europe right now over data rights and privacy. Yet, policymakers must keep in mind that tech products and services have brought significant cost and time savings to consumers, businesses, and government agencies over the last several decades. Taxpayers benefit not only from the savings those agencies experience, but also from the time saved in accessing and obtaining government services in more convenient ways (e.g., online renewal for certain driver licenses). 

We all share in the benefits of a world with high-speed internet and a competitive market for the latest and greatest digital services. This far-reaching court ruling, along with recent efforts by European countries to tax digital services, threatens to hamper the development of innovative products and services.

It will also price out small and mid-sized competitors in the global tech sector, leading (ironically, given the stated goals of EU officials) to a more concentrated and less robust market. Less innovation and less competition mean higher costs for consumers and taxpayers.

Congress should stand against efforts to weaken our country’s own laws, such as Section 230 of the Communications Decency Act, that have helped make the U.S. the leading country in the world for new tech hardware and software.