Tech giants up ante by withholding products from EU
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Facebook CEO Mark Zuckerberg at the European Parliament in May 2018. Photo: John Thys/Getty Images
Aiming to fight what they see as vague and overly burdensome regulation by the European Union, U.S. tech giants are playing one of the strongest cards they have: withholding their products.
Why it matters: Until now, the U.S. tech giants have dominated the global digital economy by serving (almost) everyone, accepting divergent regional laws as the cost of doing business.
Driving the news: As Axios scooped on Wednesday, Meta has decided not to release a new multimodal AI model and related products in the EU.
- The move follows a similar decision last month by Apple to withhold its new Apple Intelligence features from Europe.
- Separately, Meta also announced yesterday it would take a similar approach in Brazil, suspending the availability of its generative AI tools there after a privacy dispute with regulators.
Between the lines: While both companies are objecting to the vagueness and opacity of European law, Meta and Apple are taking issue with two different laws.
Apple's objection is to the Digital Markets Act, relatively new legislation that aims to increase competition and keep large companies from favoring their own products.
- The DMA requires companies make their products easily interoperable with competitors' offerings, and Apple says that will put its users' privacy and data at risk.
Meta's problem is with Europe's older privacy law, the GDPR.
- Meta says the EU has not provided clarity over what the GDPR requires for it to make use of customer data to train its AI models.
- These concerns come even before the provisions of another major piece of legislation, the EU's first-of-its-kind AI Act, kick in.
Yes, but: While Apple and Meta are signaling their unhappiness with the current state of European regulation, it's doubtful they would give up entirely on such a large market as tech enters a new era of computing with the advent of generative AI.
The intrigue: If neither side blinks, no one knows for sure how the market will evolve.
- Some would argue the absence of the U.S. giants could open the door to more European players, at least in the EU market.
- However, Europe has been regulating the tech industry more tightly than the U.S. for decades.
The tighter EU rules have led to changes in policy at the tech firms — and those changes have often been adopted globally, conferring additional protections or options for consumers around the world.
- But through all those conflicts, Europe hasn't made much progress toward its broader goal of encouraging homegrown competitors to the U.S. giants.
What we're watching: If companies like Apple and Meta keep withholding products and services from the EU and local alternatives do step in to fill the gap, the whole global online market could change.
- But matching the scale, reliability and lock-in of today's Big Tech offerings will be an uphill fight for any such challengers.
