Rick Osentoski/AP Images for Public Citizen
Local labor leaders, environmental advocates, and economic justice activists protest outside a meeting of the Asia-Pacific Economic Cooperation, where international trade policy is being discussed, May 20, 2023, in Detroit.
Critics of corporate-led globalism aptly point out that it usually creates a race to the bottom. Examples include trade deals that deliberately weaken the capacity of nation-states to regulate capitalism; competition to cut tax rates to attract multinational business; proliferation of tax and regulatory havens; invention of new concepts such as investor rights against states; and anti-consumer rights of tech companies in trade agreements.
Once in a while, however, globalization seems to create a regulatory race to the top. Consider the EU’s recent actions on data privacy, where the EU has better standards.
This week, the EU levied a 1.2 billion euro fine (about $1.3 billion) against Meta, the parent corporation of Facebook, because of Facebook’s practice of transferring European user data back to the U.S. without the safeguards required by European privacy laws. The actual order came via the Republic of Ireland, where Facebook’s European operations are based for tax purposes (neatly illustrating the race-to-the-bottom flip side).
The Irish Data Protection Commission directed Meta to cease all transfers to the U.S. of all personal data belonging to users in the EU. The commission held that Meta’s data practices violated the EU’s General Data Protection Regulation (GDPR) rules, which go far beyond data privacy protections in the U.S.
Ideally, Europe’s consumer protections would prod the U.S. to reciprocate. But in March 2022, President Biden helped Big Tech by issuing an executive order trying to implement a preliminary deal with the EU for a “Trans-Atlantic Data Privacy Framework.” This adds some new protections, but also undercuts the EU’s ability to regulate unilaterally. The deal does not yet have final approval of the EU.
Facebook is a serial offender when it comes to data privacy violations. In 2019, the FTC fined Facebook $5 billion for violating an earlier 2012 FTC order requiring the company to cease deceptive practices that misled users on privacy settings. According to the FTC, these tactics allowed the company to share users’ personal information with third-party apps that were downloaded by the user’s Facebook “friends.” This was during the Trump administration when the FTC had a Republican chair.
While the Biden administration deserves great credit for reviving antitrust enforcement, in many respects the EU has been the tougher antitrust regulator, blocking some mergers that had not been blocked by U.S. authorities. The EU has tough new rules on platform “gatekeepers,” designed to apply to Apple, Amazon, Google, Meta (Facebook), and Microsoft.
Today, trade ministers are meeting in Detroit to negotiate more details of the pending Indo-Pacific Economic Framework (IPEF), which was cooked up by the U.S. The deal includes digital provisions written by Big Tech specifically to use a trade agreement to circumvent national consumer, privacy, and competition regulations.
Granted, no national governments have totally clean hands. The EU has its own nationalistic reasons for wanting to hold U.S.-based tech giants to a higher standard of accountability. But to the extent that we get good regulation at all, it is national. Bad deregulation tends to be global.
The idea of “national champions” has been resurrected as part of Biden’s industrial policy, which also demands that beneficiaries of government subsidy have decent labor standards. As tech giants based in the U.S. are in the role of national champions, our government needs to make them clean up their acts, and not collude with Big Tech in weakening foreign consumer and antitrust regulation.
