US
Raimondo pledges to ‘think about’ codifying TTC
Insidetrade: Commerce Secretary Gina Raimondo on Wednesday told senators she would consider a suggestion that Congress codify the administration’s signature trade initiative with the European Union.
Raimondo was the sole witness during a Senate Appropriations Commerce, Justice, science and related agencies subcommittee hearing on Commerce’s fiscal year 2024 budget request. Sen. Jeanne Shaheen (D-NH), who chairs the panel, asked Raimondo if she thought it would be “helpful” to codify the U.S.-EU Trade and Technology Council in law.
“I need to think about that,” Raimondo told her.
Shaheen then asked if there should be “some funding provided” for the initiative.
“Possibly. I need to think for a minute on that,” the secretary said.
Codifying the TTC could ensure its continued operation in future U.S. administrations.
Raimondo also touted the council's efforts to date, saying the two sides had made “great progress.”
The next meeting, set to take place in Sweden in late May, will focus on efforts related to semiconductors, Raimondo told Shaheen, adding that the group also has “talked a lot about export controls.”
“It's exactly what you said. We need a formal mechanism to coordinate with our allies on issues of technology,” the secretary continued, before reiterating that she wanted to “think more properly” and come back to Shaheen on her suggestion.
Lawmakers from both parties have criticized the Biden administration for pursuing trade initiatives without seeking approval from Congress, with some contending that congressionally approved agreements are more durable than efforts pursued independently by the executive branch.
Officials in Washington and Brussels have touted the TTC as evidence of a reset in trans-Atlantic relations strained under the Trump administration – and as a critical platform for facilitating their coordination on export controls following Russia’s invasion of Ukraine.
The council also has been a forum for discussions about climate-related trade concerns, with the two sides at odds over aspects of the U.S.’ Inflation Reduction Act.
In a statement following the council’s last meeting, held in Maryland last December, the U.S. and the EU announced a slew of joint efforts, including a new “roadmap” on artificial intelligence, arrangements to coordinate efforts on semiconductor supply chains and digital connectivity projects in third countries, among others.
Democrats warn large tech firms could evade competition policies under new trade rules
CNBC: If the tech industry gets its way in trade negotiations over an Indo-Pacific framework, U.S. regulators may be limited in how they can regulate some of the country’s largest companies, a group of Democratic lawmakers warned in a letter to Biden administration officials.
Tech and business trade groups have advocated for new international data rules that lawmakers argue could allow personal information to be sent anywhere, instead of locked securely in the U.S.
Rules that the industry is advocating to include in the trade agreement “would tie Congress’s and regulators’ hands and conflict with President Biden’s whole-of-government effort to promote competition,” they wrote in the Friday letter to U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo.
It’s not the first time Democrats have raised concerns about tech provisions being included in trade agreements. In 2019, then-House Speaker Nancy Pelosi, D-Calif., pushed to keep language that echoes tech’s legal liability shield Section 230 out of the United States-Mexico-Canada Agreement.
This latest letter is signed by Sens. Elizabeth Warren, D-Mass., Amy Klobuchar, D-Minn., Sherrod Brown, D-Ohio, Richard Blumenthal, D-Conn., and Reps. Jan Schakowsky, D-Ill., David Cicilline, D-R.I., and Rosa DeLauro, D-Conn. The group urged Tai and Raimondo “not to put up for negotiation or discussion any digital trade text that conflicts” with the agenda set by the whole-of-government effort.
“Big Tech wants to include an overly broad provision that would help large tech firms evade competition policies by claiming that such policies subject these firms to ‘illegal trade discrimination,‘” the Democrats wrote. “This language would provide a basis for Big Tech firms, as well as foreign governments, to attack tech policies as ‘illegal trade barriers’ simply because they may disproportionately impact ‘digital products’ of dominant companies that happen to be headquartered in the U.S.”
The language could impact tech regulation both at home and abroad, the lawmakers warned.
“Inclusion of such provisions could undermine efforts by U.S. policymakers to pass new legislation and antitrust enforcers to crack down on anti-competitive conduct, including price fixing and self-dealing, by the largest tech companies,” they wrote. “Tech companies could also weaponize these digital trade rules to undermine similar efforts by our trading partners.”
The letter cited a U.S. Chamber of Commerce blog post about a trade group coalition note advocating for strong digital trade provisions in the Indo-Pacific Economic Framework (IPEF). That letter, addressed to Tai and Raimondo and signed by tech-backed groups like the Computer & Communications Industry Association (CCIA) and Information Technology Industry Council (ITI), said “securing high-standard digital trade rules in the IPEF is among the highest priorities.” The groups said doing so would help open American small businesses to new customers and better compete globally.
Big Tech
Microsoft, Activision Decision Shows Tech Companies Face New Scrutiny From Regulators
WSJ: The U.K. decision to block Microsoft Corp.’s plan to buy videogame producer Activision Blizzard Inc. is the latest sign of how global regulators are toughening their approach to market-dominating tech companies.
The Competition and Markets Authority, the U.K.’s antitrust watchdog, said Wednesday that it was prohibiting the deal because commitments Microsoft had proposed didn’t go far enough in addressing its concerns. Microsoft said it would appeal the decision.
The transaction has been challenged in the U.S. and is also under review in Europe.
The U.K. competition authority’s ruling comes amid heightened scrutiny of the world’s biggest tech companies by regulators and law enforcement on both sides of the Atlantic.
Antitrust agencies have faced criticism in recent years for allowing mergers to go ahead that critics say boosted the market power of large tech companies such as Facebook parent Meta Platforms Inc. and Google’s Alphabet Inc. and made it harder for newcomers to compete.
“In the current environment, tech companies are under increased scrutiny by antitrust agencies, not just in terms of conduct, but also merger control,” said Salomé Cisnal de Ugarte, a partner with King & Spalding LLP.
In some cases, lawmakers are also giving regulators new powers to deal with large tech companies.
The European Union last year approved a law that will impose a range of tough new obligations on the biggest digital giants, tackling functions such as online messaging, digital advertising, and the app ecosystem. Those rules are set to take effect next year.
Separately, the U.K. government this week proposed a new digital-competition law that aims to give more power to the CMA in regulating large tech companies.
The CMA said on Wednesday that digital markets have characteristics that make them particularly vulnerable to competition problems, and merger control is a first line of defense in preventing companies from gaining too much market power.
“Even where new technologies emerge, it is increasingly existing market players that have the funding and technical capabilities to incorporate them, not innovative startups and challengers,” the agency said.
Tech companies in the U.S. have so far lobbied effectively to keep new antitrust legislation at bay, with Republicans and Democrats splintering over what changes are needed.
But U.S. law enforcers have nonetheless pursued an aggressive strategy, challenging large tech deals and investigating whether the biggest companies including Alphabet, Apple Inc. and Amazon.com Inc. maintain their dominance through anticompetitive practices. The U.S. Justice Department in January sued to break up Google’s advertising technology business, and the FTC has sued Meta, seeking to unwind its purchase of Instagram and WhatsApp.
U.S. antitrust authorities have suffered several legal defeats in their anti-merger cases, including a trial loss that allowed Meta to acquire a virtual-reality company, but say they remain committed to taking their chances in court. The two chief enforcers, the DOJ’s Jonathan Kanter and Federal Trade Commission Chair Lina Khan, both say they need to bring cases that will advance the boundaries of U.S. antitrust law, after decades of the government permitting most deals.
That shift has aligned them more closely with the European Commission, the EU’s competition enforcer, which has a longer history of working aggressively to rein in the world’s biggest tech companies.
The EU is also reviewing the Microsoft deal. It appears to be leaning toward approving it with behavioral commitments, in which the company would pledge to abide by certain rules, people familiar with the matter said.
The FTC sued to block the Microsoft deal in December, and an administrative law judge has scheduled the trial for August.
“We also have concerns, as explained in our complaint, about the anticompetitive effects of this deal,” the agency’s bureau of competition director Holly Vedova said after the CMA decision.
When the CMA and the FTC both oppose a merger, “any big tech acquisition is going to get a rough ride,” said Tom Smith, an antitrust lawyer with Geradin Partners and a former legal director at the CMA.
The CMA’s ruling puts a spotlight on the U.K. agency, which has become an important global player since Britain’s exit from the EU. The CMA is widely viewed as an exceptionally tough global regulator because it favors structural commitments such as divestments of a business unit over an offer from a company to behave in a particular way.
The CMA can also make decisions in-house, without the need to convince a judge, giving it more leeway to pursue the outcomes it wants.
“The CMA has shown itself to be very aggressive on tech deals, and that has introduced additional uncertainty that can be challenging to manage,” said Dieter Paemen, a partner with Clifford Chance LLP.
“Transactions that used to seem straightforward to guide through global antitrust clearances now appear potentially at risk because of the CMA’s recent track record,” he said.
Some antitrust lawyers said there is a risk that the decision could make it harder for the country to attract tech companies.
“We have to have a merger policy in the U.K. that is not at odds with our industrial policy,” said Jenine Hulsmann, a London-based partner with law firm Weil, Gotshal & Manges LLP, who was involved in the Microsoft-Activision transaction.
“We can’t do that if we don’t have a merger control regime that allows companies to come and start up in the U.K. and at some point have the ability to scale and a route to market,” she said.
G-7
G-7 can turn the tide on digital trade restrictions
NikkeiAsia: The concept of DFFT is not new to the Asia-Pacific region, where there has been high interest in harnessing digital trade rules that enable trusted cross-border data flows. Singapore is leading the way in developing digital trade rules that align with the DFFT concept via its various digital economy agreements.
DFFT notions are also evident in the high-standard e-commerce rules contained in the U.S.-Japan Digital Trade Agreement and the Japan-UK Comprehensive Economic Partnership Agreement. In the broader region, there are expectations that high-standard, commercially meaningful digital trade rules will emerge form negotiations on ASEAN's Digital Economy Framework Agreement and the U.S.-driven Indo-Pacific Economic Framework for Prosperity.
As an industry organization made up of some of the world's largest technology companies, the Asia Internet Coalition is committed to working closely with governments, experts and our peers across the industry on paths toward free and trusted data flows.
Tech companies bring to the table in-depth knowledge and expertise on available tools to complement ongoing intergovernmental discussions. Privacy-enhancing technologies, data encryption and data loss prevention are examples of technological tools that enable businesses to extract value from data while ensuring protection for personal data against cybersecurity threats.
Collaboration between the public and private sectors is indispensable for developing a well-balanced policy framework for secured cross-border data flows as part of the DFFT mandate.
The Japanese government has a strong will to reach a global consensus on accelerating institutional cooperation for DFFT, and it is also proposing an international framework for public-private partnerships. Such an institutional arrangement will be an important step to strengthen evidence-based policymaking for DFFT.
The digital economy has been a lifeline during the pandemic and can be a catalyst for global economies to overcome the current challenges of inflation, sovereign debt, trade wars and geopolitical tensions. As digital ministers converge in Hiroshima, they will have an unprecedented opportunity to make DFFT a reality and unleash the full potential of the digital economy for growth and prosperity.