Digital leviathan: Can the EU Still Shape Global Regulation?

In conditions of rapid technological development, digital regulation has become a key aspect of shaping modern societies and economies. In this global context, Europe stands out as a leading regulatory entity.

On the geopolitical Stage, the EU stands out for its regulatory consistency and normative strength compared to the US, which encourages technological innovation, and China, which emphasizes its concept of digital sovereignty. Although investment is high, the EU faces challenges of economic uncertainty, global trade tensions and deglobalization, raising questions about the future of global digital relations.

The Regulatory Influencer

In the analysis of regulatory initiatives, it is important to outline a theoretical framework that includes the concepts of geoeconomics and securitization. Globalization, which has changed the dynamics of trade and investment, is facing the challenges of deglobalization, and economic threats have become a means of blackmail and endangering security. This phenomenon is reflected in the reduced rate of globalization after 2008, with increased rhetoric and policies aimed at creating a multipolar world.

The Brussels effect, which emphasizes the exceptional capabilities of the European Union in achieving legislative dominance and shaping global policy, is based on the regulatory power of the EU which derives from the size and economic influence of its market of over 500 million people. This gravitational force encourages global companies to comply with EU rules to secure access to this lucrative market, thereby extending EU norms and standards internationally.

This effect has a strong impact in the areas of data privacy, competition and copyright, where the EU leads the way in regulation. For example, the General Data Protection Regulation (GDPR) sets strict data protection standards, prompting global companies to adapt their practices, driving global changes in data handling.

The Brussels effect is not only an expression of the EU's ability to set standards, but also signifies an unparalleled power to shape global digital governance. The EU plays a key role in shaping the landscape of the digital era, significantly influencing international digital policy.

Therefore, by analyzing all these aspects, we can better understand how the EU, despite the challenges, has successfully positioned itself as a regulatory leader in the digital world. Its regulatory initiatives reflect strategies and aspirations aimed at strengthening the geo-economic position, reducing dependence and maintaining security in an era of dynamic changes and challenges of global digital relations.

A Paradigm Shift – European Open Market Protectionism

The EU has reshaped its approach to free market capitalism, triggering significant changes in economic policy. With the aim of protecting domestic industries and ensuring equal conditions, the EU more decisively adopted trade protection measures such as anti-dumping investigations, safeguard measures and increased supervision of foreign direct investments. These measures reflect a shift away from pure free trade principles towards protecting European industries from unfair competition.

The Digital Policy Frontier

In today's rapidly changing global landscape, technological power is essential for the economic competitiveness and innovation potential of countries. Despite a long history of technological achievements and scientific progress, the European Union expresses concern about falling behind the United States and China in technological dominance. The European Parliament's 2021 report warns of losing the investment race in areas such as quantum computing, 5G, artificial intelligence and biotechnology.

The EU has historically faced the challenge of lower investment in research and development (R&D) compared to the US and China. This disparity hinders its competitiveness in the technology sector. Silicon Valley and China's tech hubs are creating supportive environments for start-ups, whereas the EU, while taking steps in this direction, still faces challenges in creating a similar ecosystem for tech entrepreneurship.

According to McKinsey's research, the US and China dominate in quantum computing, artificial intelligence, and 5G networks, while the EU lags behind in these areas. France and Germany emphasize the need for strategic autonomy, which has since become central to policy expressions in Brussels. A series of initiatives shape the EU's digital policy and make it a key actor in global regulation.

The Digital Strategy for Europe lays the foundations for the digitization of the European economy and society and aims to strengthen European digital sovereignty. Initiatives such as the European Digital Policy Agency and the EU Cybersecurity Strategy further strengthen the EU's regulatory dominance in the digital realm.

In addition to regulation, the EU actively encourages innovation and digital progress through the European Plan for the Digitization of Industry. Through these initiatives, the EU wants to shape Europe's digital future, export its norms globally and become a key player in global digital regulation that reflects European values and interests.

Global Digital Policy Battleground – EU, USA and China

The United States of America is known for innovation in the digital sphere, characterized by a market approach and encouraging technological innovation. The lack of a federal data privacy law has resulted in a variety of state regulations, raising concerns about privacy and consumer rights. Although the US has a strong influence in shaping digital policy, it often lags behind the EU in setting strong data protection standards.

China advocates a digital policy model with state control over cyberspace, promoting censorship and data localization. Despite strong governance, China's approach raises concerns about data security and privacy and is seen as a departure from global standards.

The EU combines strict data protection standards with a normative vision of the digital society, emphasizing privacy and ethics. Their global reach, especially through GDPR, is driving compliance around the world. The EU's collaborative approach in shaping global digital policy further demonstrates their commitment to international cooperation.

With the European Union facing the challenges of geopolitical changes, structural deficiencies and the need to strengthen technological capacities, steps have been taken through regulatory frameworks and instruments. However, the uncertainty and unevenness among the members indicate challenges in coordination and trust within the EU. Despite its shortcomings, the EU continues to demonstrate institutional capacity and innovation in regulating digital policy, achieving the status of a regulatory hegemon.