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Europe’s antitrust policy shouldn’t ignore China

Europe has a well-earned reputation for regulating Big Tech, taking the lead on privacy, data protection and especially competition. Now, new antitrust legislation that introduces criteria to identify large online “gatekeepers” is winding its way through the European Parliament. But while the Digital Markets Act is expected to target a number of U.S. tech companies, if used strategically the DMA — and European antitrust and competition policy writ large — can also be a tool to compete with China.

In the past few years, Europe has slowly awakened to China’s challenge to transatlantic technology leadership. Although many Europeans are slowly converging on Washington’s threat perceptions, Europe still lacks the tools and political will to address challenges emanating from Beijing’s juggernauts.



While transatlantic policy responses to China should be aligned, they need not be the same. The United States and Europe should leverage their respective strengths and toolboxes to combat China’s market distorting practices in the technology sphere. And Europe should bring its comparative advantage — developing and enforcing competition policy — to bear to compete with China, beginning with the DMA.

Beijing’s tech giants are competing for size and control of the global technology ecosystem — a dynamic the transatlantic partners cannot afford to ignore. The Chinese Communist Party (CCP) has set the goal of market domination for their largest technology companies. To achieve this goal, the CCP is engaged in anti-competitive behavior to improve their companies’ market positions. In addition to state subsidies, the CCP often provides sweetheart deals to companies to improve their market standing.

The 5G case study illustrates this dynamic. The Chinese government provided 5G champion Huawei with $75 billion of state support through tax breaks, discounted resources and financing assistance. Meanwhile, China’s domestic market enables state-backed champions — including Huawei — to leverage very little competition and high market share within China to offer services for a fraction of the price in third countries. When faced with this reality, Europe’s leading producers of 5G technology, Nokia and Ericsson, previously struggled to compete with Huawei in their home market. Beijing’s domestic economic policy thus has global consequences.

In the past year, European countries have formed investment screening mechanisms to combat Beijing’s growing footprint in Europe. Yet, they still have work to do. Of the 27 member states, only 18 have established investment screening mechanisms, though an additional six are in development. There are also reasons to question the mechanism’s efficacy. The European Commission only blocked eight of the 265 projects they examined. Only 8% of the examined projects were Chinese projects. And they don’t explicitly tackle anti-competitive behavior.

 

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