BREAKINGVIEWS-Europe can afford to rattle US Big Tech’s cage

By Jennifer Johnson

LONDON, Dec 19 (Reuters Breakingviews) - Washington has confirmed what many in Europe already feared: their main ally has turned adversarial. This week, the Office of the U.S. Trade Representative, led by Jamieson Greer, accused the EU of “discriminatory” actions against American companies. He also singled out a cohort of European firms, including SAP SAPG.DE, Siemens SIEGn.DE and Spotify SPOT.N, as past beneficiaries of U.S. market access – and implied this privilege could be restricted in future. That sounds disturbing, but Europe can afford to stand by its principles.

Brussels’ pressure on Big Tech has waxed and waned this year. Three people familiar with the matter told Reuters in September that the European Commission was in no hurry to wrap up an investigation into Google in view of criticisms from the Trump administration. Yet this month, EU regulators launched a new antitrust probe into Meta META.O and handed X, formerly Twitter, a fine of 120 million euros. Almost simultaneously, Washington unveiled its new National Security Strategy, pointing to “regulatory suffocation” as the root of Europe’s economic decline. The penalty handed to X was denounced by Vice President JD Vance as an attack on free speech.

The likes of SAP can’t be blasé about Greer’s threat – the U.S. market contributed almost a third of its revenue in 2024. Yet U.S. platforms also need their European users. According to its latest transparency report, required biannually under EU law, X has 102 million monthly active users (MAUs) in the region. That’s around 20% of its global monthly user base of 550 million, as reported by the company last year.

If X is anything like Facebook and Instagram owner Meta, its European users will also be among the most important contributors to advertising income. Data from Visible Alpha puts the region’s ad revenue per average MAU at just over $92 in the last financial year. That’s significantly higher than Asia-Pacific, at just $23 per user – though still below North America at $257. In the event of persistent noncompliance, the EU could issue platforms with a temporary ban.

That’s not the only card the bloc can play. While the companies highlighted in Greer’s post are strategically important, there were some notable omissions. Dutch group ASML ASML.AS, which produces critical chipmaking equipment, was not mentioned. Nor were telecoms equipment specialists Nokia NOKIA.HE and Ericsson ERICb.ST.

That may be because there are no ready-made alternatives to some of the technologies produced by the three firms. Though much has been made of Europe’s reliance on U.S. cloud providers and satellite companies, some dependencies flow the other way. Unless lawmakers rethink their stance on Huawei, for instance, the U.S. will need Nokia and Ericsson when it comes time to upgrade its mobile networks. Though the EU is undoubtedly the underdog in its trade scuffles with the U.S., it’s not powerless.

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CONTEXT NEWS

President Donald Trump’s administration warned on December 16 that the United States could impose fees or restrictions on European service providers in response to what it deemed “discriminatory” actions against U.S. firms.

In a post on X, the Office of the U.S. Trade Representative (USTR) said EU service providers “have been able to operate freely in the United States for decades”. It highlighted nine firms – including Accenture, DHL, Mistral, SAP and Siemens – as beneficiaries of this “expansive market access”.