The Tech Tug-of-War Between the EU (China) and America

Tug-of-war is a rigorous game. Until 1920, it was also an Olympic sport.

It can also turn out to be particularly tricky when played among nations on the world stage.

Currently, the United States and Europe are engaged in an increasingly rigorous tug-of-war over technology. And it could get more than tricky...

On the one hand, the European Union has tried to jump out ahead with artificial intelligence, introducing detailed and far-reaching regulation to govern how AI is used.

The pundits call it visionary.

It probably has more to do with the EU's attempt to protect itself against the United State's technical innovation than an altruistic desire to protect humanity.

Meanwhile, the famous GAFAM (Google, Amazon,Facebook, Apple and Microsoft) announced earnings for the first quarter of 2021, and their collective 41% jump in revenue took even Wall Street by surprise. The juggernaut that is the Fab Four of West Coast tech giants continues to expand its reach and has profited mightily from the need for digitalization during the pandemic.

Europe looks upon this freight train with a mixture of awe and fear - hence the move to "lead the way" with sweeping rules for AI. The same emotions (and logic) also inspired earlier GDPR and the data-processing regulation attached to it.

All the more "surprising" then, when Apple's announcement of new privacy rules in its iOS 14.5 sparked an outcry in Europe - and a lawsuit from German companies, including Axel Springer.

All of a sudden, privacy-conscious Europeans have lost their virtue.

Is Europe simply lazy?

Concerns about protecting small business advertisers and preventing Apple from enlarging its monopoly supposedly inspired the German lawsuit.

But maybe there is a more mundane reason - laziness.

The main reason Apple (and other American tech giants) can exercise borderline monopolistic powers in their respective markets (and around the world) is because they have developed digital real estate that allows them to control the playing field - level or not.

In more direct terms - they have figured out how to build products and services that people really want and this fact gives them great power.

Europeans...well, not so much.

The absence of many mass-market consumer products with universal appeal has put European businesses at the mercy of GAFAM and others.

Recognizing this, some countries have turned to China to "catch up”. Such a move is tempting, of course. China has deep pockets to invest. Its tech companies rival those of Silicon Valley for innovation and user base; its model of modernization is an awe-inspiring wonder and its mass of middle-class tourists provides ample consumers for European shops and tourist spots.

With the Asian giant and its investment weight at their backs, Europe has outsourced its needs and wants, while attempting to maintain its status quo social system.

Not too much effort, not too much risk - and all the benefits...or so it seems.

Mimics and (or) masters

At this point, the tug-of-war begins to take on a dangerous twist. China's involvement in Europe and to a lesser extent Africa could just tilt the tables back the other way. And so the United States has turned up the heat on the UK and other European countries to shut out tech giant Huwaei, as well as other Chinese companies from building new technology systems on the Old Continent.

President Biden's proposal for a global minimum corporate tax serves as the olive branch to keep Europe on-side, while still allowing American technology to dominate.

Of course, it does not have to be this way.

The world is full of inventions that were born in Europe. Capital and smart entrepreneurs can be found in abundance in Paris, London, Berlin, Warsaw and Zürich.

To avoid losing the tug-of-war and falling flat on its face, Europe needs to be both a mimic and a master. Half-hearted measures, such as the recently announced conglomerate of 30+ banks aiming to tackle PayPal in the payments sphere won't succeed. Trying to fight Big Tech with financial expertise alone is futile.

Truly mimicking means adopting the "no holds barred" approach to innovation and solving the biggest problems of the world and putting enough cash behind them to make a difference.

And mastering means doing it even better.