American Sovereignty is Back

Why America Capitulated to Europe on Tech, and How Trump Can Take It Back

Keegan McBride, my co-author, is a Lecturer in AI, Government, and Policy at the Oxford Internet Institute and a Non-Resident Senior Fellow at the Foundation for American Innovation.

In an unprecedented move Tuesday, Mark Zuckerberg of Meta released plans promising to “work with President Trump to push back against governments around the world going after American companies and pushing them to censor.” Going further, he argued that “Europe has an ever-increasing number of laws institutionalizing censorship and making it difficult to build anything innovative there.” This rare direct challenge to European regulatory authority signals a broader shift: Trump’s election has fundamentally altered the balance of power between American technology companies and their foreign regulators.

The calculus is simple. The European Union’s economies, governments, and security infrastructure all depend on American technology. While European regulators have leveraged this dependence to impose their vision of digital governance on U.S. companies, the incoming administration sees an opportunity to reverse this dynamic. At stake is not just corporate compliance costs or content moderation policies but whether the architects of the world’s digital infrastructure will continue to cede regulatory authority to nations that depend on these same innovations.

This realignment comes at a critical moment. Artificial intelligence (AI) is reshaping the world's economy, and competition between the U.S. and China continues to intensify. Therefore, the ability of American companies to innovate, free from foreign regulatory constraints, has now become a matter of national security. Even more importantly, American companies support American values, such as freedom of speech, and play a critical role in ensuring the long-term resilience of a digital and democratically aligned world.

While the EU may fear their dependence on the American technology industry, it is in their own interest for these firms to be strong enough to resist advances from techno-authoritarian adversaries. Even so, European regulators and bureaucrats still believe that they can curtail the “threat” of American technology companies by creating and enforcing increasingly draconian rules and regulations that are extraterritorial. This process gave rise to the idea of the “Brussels Effect,” which, while global in nature, clearly has American firms as the primary target.

For example, of the six companies affected by the EU Digital Markets Act (DMA)—Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft—five are American, while Bytedance is Chinese. None are European. GDPR imposes costly compliance requirements that disproportionately affect American firms. When combined with the DSA, which requires platforms to monitor and remove content that violates EU standards, these initiatives entrench the dominance of large firms that can devote significant resources to ensuring compliance.

As the Biden administration did not take technology seriously, a vacuum was created that effectively ceded regulatory control of the American technology industry to the EU. American firms paid hundreds of millions of dollars in fines to the coffers of the EU. Still, as the EU grew as a “regulatory superpower,” it struggled to create and sustain its own technology ecosystem. Unfortunately for Europe, their misinformed rush to regulate the American technology industry has brought them too close to the proverbial sun. Instead, the EU faces deteriorating levels of productivity, innovation, and technology development. President Ursula Von Der Leyen has promised to prioritize stopping “Europe’s 'slow agony' of decline,” support new European digital champions, and pursue strategies to further European “digital sovereignty.” However, such efforts are unlikely to succeed.

Now the focus of many an anecdote on how to not do innovation or tech policy, policymakers in Brussels are facing questions from leaders in the American technology community who are starting to question why countries that are not building or innovating at the cutting edge of technology have a say in how it should be built, used, or regulated. Increasingly, these companies have begun to refuse to release their new digital innovations to the EU market.

Expressing a sentiment held by many in the American tech community, Palantir CEO Alex Karp recently argued that “Every single relevant company in the world is in [America]” and that “Europe has basically decided to regulate its anemic and nonexistent tech scene out of production. All of those people want to come to America”. This sentiment closely mirrors the sentiment expressed in a letter sent to the Department of Justice in November by Senator Ted Cruz (TX) inquiring into possible Foreign Agents Registration Act violations by European non-profits influential in American AI policy. In it, he accused European nonprofits of attempting to “gain control over AI’s development, but to also gain control over information flow and a citizen’s ability to communicate with others free from government intrusion.”

It is now clear that President Trump’s election represents a new era for the American technology ecosystem. America will once again recognize that being an American ally requires sharing American values, first and foremost the defense of free speech. Both big tech and the European Union must adapt to this new political reality. The EU’s efforts to export its regulatory ambitions, which undermine core American values, will soon face a steep political cost. In the words of incoming Crypto and AI Czar David Sacks, “the timeline split, and we’re on a different path now.”