Generally, people who want to achieve excellence try to learn from the best: Ambitious college students seek out successful mentors. Up-and-coming football coaches study Alabama’s Nick Saban. Aspiring business leaders study the greatest CEOs, such as those researched by Jim Collins in Good to Great: Why Some Companies Make the Leap and Others (HarperBusiness, 2001).

When it comes to the tech industry, the US has been the example to follow. As I wrote in an earlier piece:

Eight of Forbes’ 2019 top 10 tech companies (based on market value) were from the US. South Korea (Samsung) and China (Tencent) hosted the other two companies. In 2020, Investopedia listed its top 10 tech companies based on total revenue. Six US companies made that top 10. The others were from South Korea (Samsung), Taiwan (Foxconn), and Japan (Sony and Panasonic). . . . Notice that none of the top 10 tech companies are from Europe, even though Europeans have technical talent.

So it is hard to understand why Sens. Lindsey Graham (R-SC) and Elizabeth Warren (D-MA) want the US to mimic Europe’s regulation of the tech industry. The senators are teaming up on legislation to create “a system more like Europe: a regulatory environment with teeth,” Sen. Graham stated in a recent hearing.

What would happen if we subjected our technology experts and entrepreneurs to EU-style regulations? The European Commission acknowledges that Europe is lagging behind the “US and China in terms of consumer-oriented applications and platforms.” Writers for the International Economy summarize EU leadership’s views this way: “Once one of [Europe’s] young tech geniuses starts to gain traction, they often move to Silicon Valley where the tech community is immense and funding is easily found without Europe’s regulatory hassles.”

And as Adam Thierer recently observed, the regulations are particularly costly to small tech companies:

Europe’s regulatory burdens hit small and mid-sized firms hardest. Two recent studies have documented how [the EU 2018 General Data Protection Regulation] has “come at substantial costs in foregone innovation” and resulted in “more concentrated market structures and entrenching the market power of those who are already strong.”

The motivation for wanting to be like Europe appears to be the perception that the Federal Trade Commission (FTC) is ineffective in policing privacy and national security violations. This is in addition to congressional concerns over social media content regulation practices. The Graham-Warren response to supposed FTC failures is to create a new federal regulator for Big Tech. But if lawmakers cannot make the FTC effective, what makes the senators believe that Congress can create an effective new regulator?

The difference for Graham appears to be that a new agency would have licensing authority specific to tech companies. This authority would empower the regulator to close a company if the regulator is unhappy with its practices.

Such a kill switch would be an authoritarian’s dream. Politicians have an uneasy relationship with content on social media. Members of Congress pressure social media to delete, label, or protect what people say, depending in part on its political nature. Today’s threats to companies are to embarrass their executives, alter Section 230, launch antitrust investigations, and issue fines. The ability to kill the business would give the government almost total control, much as China exerts over social media.

A better alternative than a new regulatory agency—which would create a whole new set of jurisdictional conflicts, opportunities for regulatory capture, and new avenues for political players to coerce the industry—would be to revitalize the FTC. The current FTC is spending its resources developing rules to control American businesses that are doing just fine, launching ill-conceived antitrust cases rather than doing the hard work of identifying where there really is market power and where it is being used to harm customers.

A revitalized FTC could take on the admittedly difficult task of investigating why market power occurs and attacking root causes that will damage customers. It would also ensure that platforms are transparent with their users and keep their promises about data collection and protection. The FTC could also ensure that platforms’ content moderation policies are transparent, clear, and followed, and not inappropriately influenced by government.

The post US Senators Want the US to Imitate Europe’s Tech Policies appeared first on American Enterprise Institute – AEI.