FRANKFURT, Germany (AP) — TikTok has agreed to withdraw a rewards feature that raised concerns about its potential to encourage excessive screen time, particularly among children, the European Union’s executive commission said Monday.
It was the first resolution of an investigation under the 27-country EU’s sweeping Digital Services Act, which went into effect in February and aims to ensure a “safe and accountable online environment” by regulating large digital platforms.
TikTok made the commitment without conceding the feature violated the Digital Services Act, officials said.
The commission has however ruled that the withdrawal is legally binding, which “sends a clear message to the entire social media industry,” said Margrethe Vestager, European commission for digital affairs.
“Design features on platforms with addictive effects put the well-being of their users at risk,” she said in a statement. “That’s why we have made TikTok’s commitments under the DSA legally binding.”
The case involves TikTok Lite, a low-bandwidth version of the app released in Spain and France. It allowed users to earn points for things like following creators, liking content, or inviting friends to join TikTok. The points could be exchanged for Amazon vouchers and gift cards on PayPal. TikTok said rewards were restricted to users 18 years and older, who had to verify their age. Users could watch up to one hour a day of videos to earn rewards, which were capped at the equivalent of one euro ($1.09) a day.
The commission opened an investigation in April due to concerns that TikTok has not done a diligent assessment required under the act of the feature’s potential “addictive effect,” especially for children, “given suspected absence of effective age verification mechanisms on TikTok.”
The resolution of the TikTok Lite investigation does not affect an earlier probe launched against TikTok focusing on concerns about protection of minors, advertising transparency, data access for researchers, and mitigating risks of “behavioral addiction” and harmful content.
BRUSSELS/STOCKHOLM (Reuters) – Big Tech is facing its biggest challenge in decades as antitrust regulators on both sides of the Atlantic crack down on alleged anti-competitive practices that could result in break-up orders to Apple and Alphabet’s Google, a first for the industry.
That in turn could inspire watchdogs around the world to pile on, as evidenced in the growing number of antitrust probes in various countries following the opening of EU and U.S. cases. Since AT&T was broken up exactly 40 years ago, no company has faced the possibility of a regulator-led break-up in the United States until now.
Google has said it disagreed with the EU’s accusations while Apple said the U.S. lawsuit is wrong on the facts and the law.
In 1984, AT&T, also known as Ma Bell, was broken up into seven independent companies called “Baby Bells” to open up one of the most powerful monopolies of the 20th century. AT&T, Verizon and Lumen are currently the only surviving entities.
Regulators now allege companies such as Apple and Google have built impenetrable ecosystems around their products, making it difficult for customers to switch to rival services, which led to the coining of the term walled gardens.
The U.S Department of Justice on Wednesday warned Apple, a $2.7 trillion company, that a break-up order is not excluded as a remedy to restore competition after it teamed up with 15 states to sue the iPhone maker for monopolising the smartphone market, thwarting rivals and inflating prices.
Even so, it will likely take years to decide the case, which Apple has vowed to fight.
The U.S. actions come on the heels of other mounting threats across Europe this week.
Big Tech will face more scrutiny shortly with Apple, Meta Platforms and Alphabet likely to be investigated for potential Digital Markets Act (DMA) violations that could lead to hefty fines and even break-up orders for repeated breaches, people with direct knowledge of the matter told Reuters on Thursday, on the condition of anonymity.
EU antitrust chief Margrethe Vestager helped pave the way for drastic measures last year when she accused Google of anti-competitive practices in its money-spinning adtech business and that it may have to divest its sell-side tools.
She said that requiring Google to sell some of its assets seemed to be the only way to avoid conflicts of interest as it would prevent Google from allegedly favouring its own online digital advertising technology services versus advertisers and online publishers.
Vestager is expected to issue a final decision by the end of the year.
European Parliament lawmaker Andreas Schwab, who was heavily involved in drafting landmark EU DMA tech rules that kicked in this month, said lawmakers want bold action against Big Tech which flouts rules.
“If they don’t comply with the DMA, you can imagine what Parliament will ask for. Break-ups. The ultimate goal is to make markets open, fair and allow more innovation,” he said on Friday.
BREAKING UP IS HARD TO DO
It is far from certain that regulators will issue break-up order as they mull options and any action may just result in a fine. Legal experts also suggested the case against Apple, drawing from the 1998 case against Microsoft, could be more difficult this time.
“In the European Union, there is less of a tradition, with splitting a company seen as a last resort. It has never happened before,” said a Commission official, speaking on condition of anonymity.
Apple’s highly integrated system would also make a break-up difficult compared with Google, said lawyer Damien Geradin at Geradin Partners, who is advising several app developers in other cases against Apple.
“It seems to me much more complicated. You are talking about something that is integrated, for example you can’t force Apple to divest its App Store. That doesn’t make sense,” he said.
He said it would be better to impose behavioural remedies on Apple that obligates it to do certain things while in the case of Google, a break-up order could simply target acquisitions made to strengthen its key services.
“What’s more likely is they (DOJ) go for remedies like opening up hardware functionality, or making sure developers aren’t being discriminated against in terms of pricing,” said Max von Thun, director of advocacy group Open Markets.
“I think they want to say that everything’s on the table, but it doesn’t necessarily mean they’ll choose that path,” he said.
Apple gets most of its nearly $400 billion-a-year revenue from selling hardware — iPhones, Macs, iPads and Watches — followed by its Services business, which will brings in roughly $100 billion a year.
Structural remedies such as break-ups will ultimately be tested in courts, said Assimakis Komninos, partner at law firm White & Case.
“I would say that experiences of imposed structural measures, such as breakups, are not many, but the small past experience shows that this is very tricky, aside from the formidable legal challenges,” he said.
(Reporting by Foo Yun Chee in Brussels and Supantha Mukherjee in Stockholm, additional reporting by Martin Coulter in London; Editing by Ken Li and Anna Driver)
Vestager was addressing increasing concerns among competition regulators that the control over artificial intelligence is being gobbled up by a few leading technology companies.
Microsoft has acquired a leading stake in OpenAI, the company behind popular chatbot ChatGPT, and is in a fierce race with competitor Google over who can roll out the most advanced AI tech the fastest.
Antitrust authorities have zoned in on the issue. In the United States, both the Justice Department and the Federal Trade Commission are looking at how to probe OpenAI on antitrust grounds. European Union regulators in January asked industry players for feedback on whether they see issues with competition for AI. And the United Kingdom’s Competition and Markets Authority (CMA) launched a similar survey in December.
At the heart of Europe’s fears: A repeat of what happened with the last generation of internet giants. When social media, search and cloud firms boomed, it created titans like Facebook’s parent company Meta, Google and Amazon — but reduced Europe to a bystander unable to catch up and compete.
Big data became “an essential driver of competition … It completely changed market dynamics,” Vestager said in the interview, on her visit to Washington, D.C. “Now, with AI, it is likely that we will see a change in market dynamics as well, and it’s likely that it will happen much faster than what we saw of network effects and the data-driven marketplace,” she said.
Lionel Barber is former editor of the Financial Times (2005-20) and Brussels bureau chief (1992-98)
Nobody does “No” better than the French. Charles De Gaulle said “Non” twice to Britain’s bid to join the European Economic Community; Jacques Chirac said “Non” to the Iraq war; and Emmanuel Macron this week gave a thumbs down to Fiona Scott Morton, the American Yale academic selected for the post of top economist at the EU’s powerful competition directorate in Brussels.
L’affaire Scott Morton may seem trivial in comparison to the (still unresolved) debate over Britain’s place in Europe or armed conflict in the Middle East, but the French veto of the first foreigner to take up the post says an awful lot about the European Union’s current paranoia about America’s influence and power.
As Macron has pushed a vision of Europe that stands up to the U.S., resisting pressure to become “America’s followers,” as he put it in April, such thinking has strengthened in Brussels.
The Scott Morton fiasco brings back memories of a lunch in Brussels exactly 30 years ago when some officials suspected the U.S. was engaged in an Anglo-Saxon plot to sabotage their plans for economic and monetary union. “Remember James Jesus Angleton,” said a stone-faced Belgian bureaucrat, invoking the name of the legendary, obsessive CIA counterintelligence officer at the height of the Cold War.
Professor Scott Morton was selected as the best candidate in open competition. She enjoyed the backing of Margrethe Vestager, the Danish EU competition commissioner often described as the most powerful antitrust regulator in the world. She also had support from Ursula von der Leyen, German president of the European Commission, whose leadership during the Ukraine war and the COVID pandemic has won widespread praise on both sides of the Atlantic.
All this counted for naught. Despite her distinguished academic pedigree, Scott Morton, a former Obama administration antitrust official, worked for Apple, Amazon and Microsoft in competition cases in the U.S. The notion her background somehow disqualified her for the job shows George W. Bush was wrong when he complained the French had no word for “entrepreneur.” Today’s problem is that Paris has no understanding of the term “poacher turned gamekeeper.”
As Carl Bildt, former Swedish prime minister, tweeted: “Regrettable that narrow-minded opposition in some EU countries has led to this. She was reportedly the most competent candidate, and a knowledge of the U.S. and its antitrust policies should certainly not have been a disadvantage.”
Now, President Macron’s opposition to the appointment has attracted a good deal of support in the Commission, in the European Parliament and among European trade unions. Cristiano Sebastiani, head of Renouveau & Démocratie, a trade union representing EU employees, said senior EU officials should “be invested, believe and contribute towards the European project. The very logic of our statute is that an EU official can never go back to being an ordinary citizen.”
France’s veto of Professor Scott Morton is de facto a veto of Vestager, who was almost untouchable during her first term as competition commissioner between 2014-19. She won kudos for investigating, fining and bringing lawsuits against major multinationals including Google, Apple, Amazon, Facebook, Qualcomm, and Gazprom. More controversially, at least in Paris and Berlin, she vetoed the planned merger between Alstom and Siemens, two industrial giants intent on creating a European champion.
Vestager’s second term has been a different story. She has suffered reverses in the courts which overturned punitive fines against Apple and Qualcomm. Then, although she ranks as a vice-president of the Commission, Vestager found herself challenged by a nominal underling in the shape of Thierry Breton, a former top French industrialist put in charge of the EU’s internal market.
Both have battled over the policing of the EU’s Digital Markets Act and over policy on artificial intelligence, a proxy fight for influence overall in Brussels.
Vestager and Breton have battled over the policing of the EU’s Digital Markets Act and over policy on artificial intelligence | Olivier Hoslet/EPA/AFP via Getty Images
Breton favors the so-called AI Pact, an effort to bring forward parts of the EU’s draft Artificial Intelligence Act. This would ban some AI cases, curb “high-risk” applications, and impose checks on how Google, Microsoft and others develop the emerging technology.
By contrast, Vestager favors a voluntary code of conduct focused on generative AI such as ChatGPT. This could be developed at a global level, in partnership with the U.S., rather than waiting for the two years it will take to secure legislative passage of Breton’s AI Pact.
So what’s the solution? If Europe is to have any chance of prevailing, so the argument goes, member states must take a far harder-nosed attitude to competition policy. This leads in turn to the creation of national or pan-European champions at the expense of crackdowns on subsidies and other anti-competitive behavior. In short, the very liberal policies designed to protect the single market’s level playing field and embodied by the fighting Viking.
For those who occasionally wonder how power has shifted inside the EU since Brexit took the U.K. out of the equation, it is proof indeed that “liberal Europe” is on a losing streak.
LONDON — Britain was rebuffed by the Biden administration after multiple requests to develop an advanced trade and technology dialogue similar to structures the U.S. set up with the European Union.
On visits to Washington as a Cabinet minister over the past two years, Liz Truss urged U.S. Commerce Secretary Gina Raimondo and senior Biden administration officials to intensify talks with the U.K. to build clean technology supply chains and boost collaboration on artificial intelligence (AI) and semiconductors.
After Truss became prime minister in fall 2022, the idea was floated again when Raimondo visited London last October, people familiar with the conversations told POLITICO. But fear of angering the U.S.’s European partners and the U.K.’s diminished status outside the EU post-Brexit have posed barriers to influencing Washington.
Businesses, lawmakers and experts worry the U.K. is being left on the sidelines.
“We tried many times,” said a former senior Downing Street official, of the British government’s efforts to set up a U.K. equivalent to the U.S.-E.U. Trade and Technology Council (TTC), noting Truss’ overtures began as trade chief in July 2021. They requested anonymity to speak on sensitive issues.
“We did speak to Gina Raimondo about that, saying ‘we think it would be a good opportunity,’” said the former official — not necessarily to join the EU-U.S. talks directly, “but to increase trilateral cooperation.”
Set up in June 2021, the TTC forum co-chaired by Raimondo, Secretary of State Antony Blinken and U.S. trade chief Katherine Tai gives their EU counterparts, Margrethe Vestager and Valdis Dombrovskis, a direct line to shape tech and trade policy.
The U.S. is pushing forward with export controls on advanced semiconductors to China; forging new secure tech supply chains away from Beijing; and spurring innovation through subsidies for cutting-edge green technology and microprocessors.
The TTC’s 10 working groups with the EU, Raimondo said in an interview late last year, “set the standards,” though Brussels has rebuffed Washington’s efforts to use the transatlantic body to go directly after Beijing.
But the U.K. “is missing the boat on not being completely engaged in that dialogue,” said a U.S.-based representative of a major business group. “There has been some discussion about the U.K. perhaps joining the TTC,” they confirmed, and “it was kind of mooted, at least in private” with Raimondo by the Truss administration on her visit to London last October.
The response from the U.S. had been ‘’let’s work with what we’ve got at the moment,’” said the former Downing Street official.
Even if the U.S. does want to talk, “they don’t want to irritate the Europeans,” the same former official added. Right now the U.K.’s conversations with the U.S. on these issues are “ad hoc” under the new Atlantic Charter Boris Johnson and Joe Biden signed around the G7 summit in 2021, they said, and “nothing institutional.”
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up | Pool photo by Olivier Matthys/AFP via Getty Images
Securing British access to the U.S.-EU tech forum or an equivalent was also discussed when CBI chief Tony Danker was in Washington last July, said people familiar with conversations during his visit.
The U.K.’s science and tech secretary, Michelle Donelan, confirmed the British government had discussed establishing a more regular channel for tech and trade discussions with the U.S., both last October and more recently. “My officials have just been out [to the U.S.],” she told POLITICO. “They’ve had very productive conversations.”
A U.K. government spokesperson said: “The U.K. remains committed to working closely with the U.S. and EU to further our shared trade and technology objectives, through the EU-UK Trade and Cooperation Agreement, the U.S.-U.K. Future of Atlantic Trade dialogues, and the U.K.-U.S. technology partnership.
“We will continue to advance U.K. interests in trade and technology and explore further areas of cooperation with partners where it is mutually beneficial.”
Britain the rule-taker?
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up. Senior officials hoped to get a deal securing the free flow of data between the U.S. and U.K. across the line and addressed similar issues as the TTC.
They couldn’t secure the data deal. The U.K. is expected to join a U.S.-led effort to expand data transfer rules baked into the Asia-Pacific Economic Cooperation trading agreement as soon as this year, according to a former and a current British official, who spoke on the condition of anonymity to discuss internal deliberations. The next formal meeting between the U.K. and U.S. is penciled in for January 2024.
Ongoing dialogue “is vital to secure an overarching agreement on U.K.-U.S. data flows, without which modern day business cannot function,” said William Bain, head of trade policy at the British Chambers of Commerce (BCC). “It would also provide an opportunity to set the ground rules around a host of other technological developments.”
In contrast, the U.S. and EU are always at work, with TTC officials in constant contact with the operation — though questions have been raised about how long-term the transatlantic cooperation is likely to prove, ahead of next year’s U.S. presidential election.
“Unless you have a structured system or set up, often overseen by ministers, you don’t really get the drive to actually get things done,” said the former Downing Street official.
Right now cooperation with the U.S. on tech issues is not as intense or structured as desired, the same former official said, and is “not really brought together” in one central forum.
Britain has yet to publish a formal semiconductor strategy | Thomas Coex/AFP via Getty Images
“This initiative [the TTC] between the world’s two regulatory powerhouses risks sidelining the U.K.,” warned lawmakers on the UK Parliament’s Foreign Affairs Committee in a report last October. Britain may become “a rule-taker rather than a rule-maker,” MPs noted, citing the government’s “ambiguous” position on technology standards. Britain has yet to publish a formal semiconductor strategy, and others on critical minerals — like those used in EV batteries — or AI are also missing.
Over the last two years, U.S. trade chief Tai has “spoken regularly to her three successive U.K. counterparts to identify and tackle shared economic and trade priorities,” said a spokesperson for the U.S. Trade Representative, adding “we intend to continue strengthening this partnership in the years to come.”
All eyes on Europe
For its part, the EU has to date shown little interest in closer cooperation with the U.K.
Three European Commission officials disregarded the likelihood of Britain joining the club, though one of those officials said that London may be asked to join — alongside other like-minded countries — for specific discussions related to ongoing export bans against Russia.
Even with last week’s breakthrough over the Northern Ireland protocol calming friction between London and Brussels, the U.K. was not a priority country for involvement in the TTC, added another of the EU officials.
“The U.K. was extremely keen to be part of a dialogue of some sort of equivalent of TTC,” said a senior business representative in London, who requested anonymity to speak about sensitive issues.
U.K. firms see “the Holy Grail” as Britain, the U.S. and EU working together on this, they said. “We’re very keen to see a triangular dialogue at some point.”
The U.K.’s haggling with the EU over the details of the Northern Ireland protocol governing trade in the region has posed “a political obstacle” to realizing that vision, they suggested.
Yet with a solution to the dispute announced in late February, the same business figure said, “there will be a more prominent push to work together with the U.K.”
TTC+
Some trade experts think the UK would increase its chances of accession to the TTC if it submitted a joint request with other nations.
But prior to that happening, “I think the EU-U.S. TTC will need to first deliver bilaterally,” said Sabina Ciofu, an international tech policy expert at the trade body techUK.
Representatives speak to the media following the Trade and Technology Council Meeting in Maryland | Saul Loeb/AFP via Getty Images
When there is momentum, Ciofu said, the U.K. should join forces with Japan, South Korea and other advanced economies to ask for a TTC+ that could include the G7 or other partners. At the last TTC meeting in December, U.S. and EU officials said they were open to such an expansion around specific topics that had global significance.
But not all trade experts think this is essential. Andy Burwell, director of international trade at the CBI, said he doesn’t “think it necessarily matters” whether the U.K. has a structured conversation with the U.S. like the TTC forum.
Off the back of a soon-to-be-published refresh of the Integrated Review — the U.K.’s national security and foreign policy strategy — Prime Minister Rishi Sunak should instead seize the opportunity, Burwell said, to pinpoint where Britain is “going to own, collaborate and have access to various aspects of the supply chains.”
The G7, Burwell said, “could be the right platform for having some of those conversations.”
Yet the “danger with the ad hoc approach with lots of different people is incoherence,” said the former Downing Street official quoted above.
Too many countries involved in setting the standards can, the former official said, “create difficulty in leveraging what you want — which is all of the countries agreeing together on a certain way forward … especially when you’re dealing with issues that relate to, for example, China.”
Additional reporting by Mark Scott, Annabelle Dickson and Tom Bristow
Thierry Breton is winning the war of ideas in Brussels.
The ex-CEO is a political whirlwind with a gigantic portfolio as internal market chief, the backing of French President Emmanuel Macron and lots of proposals. He’s been touring European Union capitals to win support for plans to shield Europe’s industry from crippling energy prices, American subsidies and “naive” EU free traders.
France’s decades-long push for more state intervention is finally findingsome echo in Berlin and the 13th floor of the Berlaymont building, occupied by European Commission President Ursula von der Leyen, who largely owes her job to Macron.
Omnipresent and ebullient, Breton is playing a key role in marshaling industry and political support for sweeping but so far vague plans to boost clean tech, secure key raw materials and overhaul EU checks on government support that he blasts as too slow to help companies.
“Of course there is resistance; my job is precisely to manage and align everyone,” he told French TV this week of his January meetings with Spanish, Polish and Belgian leaders to flog a forthcoming industrial policy push that could be a turning point in how far European governments will finance companies.
Time is short. Von der Leyen wants to line up proposals for a February summit. European industry is complaining that it can’t swallow far higher energy prices and tighter regulation for much longer, with at least one announcing a European shutdown and an Asian expansion.
Breton said governments don’t need convincing on the need for rapid action. But he’s running up against one of Europe’s sacred cows — EU state aid rules run by Executive Vice President Margrethe Vestager that curb government support with lengthy checks to make sure companies don’t get unfair help. She’s also under intense pressure to preserve a “level playing field” as smaller countries worry about German and French financial firepower.
The French internal market commissioner’s bullish style often sees him act as if he’s got a role in subsidies. In the fall, he sent a letter to EU countries asking them to send views on emergency state aid rules to the internal market department, which is under his supervision, two EU officials recalled.
In a meeting with European diplomats, a Commission representative had to correct it, the EU officials said, asking capitals to make sure the input goes instead to the competition department overseen by Vestager.
Europe First
While Breton doesn’t like to be called a protectionist, his latest mission has been to protect Europe from its transatlantic friend.
As early as September, one Commission official said, the Frenchman was mandated by Europe’s industry to speak out against U.S. President Joe Biden’s Inflation Reduction Act, which provides tax credits for U.S.-made electric cars and support to American battery supply chains.
U.S President Joe Biden gives remarks during an event celebrating the passage of the Inflation Reduction Act on September 13, 2022 | Anna Moneymaker/Getty Images
His Paris-backed campaign charged ahead while EU officials and diplomats tiptoed around the subject. Some within the Commission headquarters found his bad cop routine helpful in keeping pressure on the U.S.
“He’s been constructive, though clearly disruptive,” said Tyson Barker, head of the technology and global affairs program at the German Council of Foreign Relations.
The Frenchmanhas even pitched himself as the bloc’s “sheriff” against Silicon Valleygiants, warning billionaire Elon Musk that an overhaul of the Twitter social network can only go so far since “in Europe, the bird will fly by our rules.”
“Big Tech companies only understand balances of power,” said Cédric O, a former French digital minister who worked with Breton during the French EU Council presidency. “When [Breton and Musk] see each other, it necessarily remains cordial, but Breton shows his teeth and rightly so. It’s his job.”
Breton can even surprise his own services, according to two EU officials. In May, the Commission’s department responsible for digital policy — DG CONNECT — was caught off guard when Breton announced in the press that he would unveil plans by year-end to make sure that technology giants forked out for telecoms networks.
In so doing, Breton — who was CEO of France Télécom in the early 2000s — resurrected a long-dormant and fractious policy debate that had been put to rest almost a decade ago, when erstwhile Digital Commissioner Neelie Kroes ordered Europe’s telecoms operators to “adapt or die” rather than seek money from content providers.
After Breton’s commitments, the Commission’s services were soon scrambling to develop some sort of a coherent policy program to deliver on the Frenchman’s comments. A consultation is scheduled for early this year.
Carte blanche
Breton is a rare creature in the halls of the Berlaymont, where policy is hatched slowly after extensive consultation. To a former CEO with a broad remit — his portfolio runs from the expanse of space to the tiniest of microchips — rapid reaction matters more than treading on toes or singing from the hymn sheet. This often sees him floating ideas and then pulling back.
Last year he alarmed environmentalists by raising the prospect of a U-turn on the EU’s polluting car ban. He wagged his finger at German Chancellor Olaf Scholz for a solo trip to China. He called for nuclear energy to be considered green. He has pushed out grand projects — such as industrial alliances on batteries and cloud, or a cyber shield — that he doesn’t always follow up on.
He’s even pushed forward a multibillion-euro EU communication satellite program dubbed Iris², a favorite of French aerospace companies, that will see the bloc build a rival to Musk’s space-based Starlink broadband constellation.
“It’s clear that he’s been given more free rein than others,” said one EU official. “He has von der Leyen’s ear,” the official added, noting that Breton enjoys “privileged access” to the Commission president — who may be mindful that she’ll need French support for a second term.
According to an official, Breton “has von der Leyen’s ear” and enjoys “privileged access” to the Commission president | Valeria Mongeli/AFP via Getty Images
Indeed, Breton’s massive role was partly designed as a counterweight to a German president.
“There is a criticism of von der Leyen for being too German,” explained Sébastien Maillard, director of the Jacques Delors Institute think tank. “There may inevitably be a division of roles between them — [where Breton is] a counterbalance.”
He’s been called an “unguided missile,” but more often than not, the Frenchman has Paris’ backing when going off script. His October op-ed with Italian colleague Paolo Gentiloni, which called for greater European financial solidarity, was part of France’s agenda, according to one high-ranking Commission official.
“When he went out in the press with Gentiloni against Scholz’s €200 billion, he was clearly doing the job for Macron,” the official said.
His November call for a rethink on the 2035 car engine ban came just after a week after critical green legislation had been finalized by Commission Executive Vice President Frans Timmermans and jarred with the EU’s own position at the COP 27 climate summit in Indonesia. But it aped the position of French auto industry captains, such as Stellantis CEO Carlos Tavares and Renault’s Luca de Meo, who wanted Brussels to slam the brakes on the climate drive.
Breton had not coordinated his car comments with colleagues in advance, according to two Commission officials.
Less than 10 days later, French Prime Minister Elisabeth Borne echoed caution about the “extremely ambitious” engine ban and warned that pivoting to electric car manufacturing was daunting.
Going A-list
Breton acknowledged himself that he wasn’t Macron’s first choice for the critical EU post, telling POLITICO at a live event that he was a “plan B commissioner.”
Asked if he was targeting an A-list job for the new Commission mandate in 2024, he said he “may be able to consider a new plan B assignment — if it is a plan B.”
“He is thinking about the future,” said one EU official. “Look at his LinkedIn posts. He is thinking past the next European elections. He definitely wants to convince Macron to get an expanded portfolio.”
Grabbing the Commission’s top job may be tricky, relying on how EU leaders will line up, according to multiple EU and French officials.
There are other jobs, including overturning the unwritten law that no French or German candidate can hold the economically powerful competition portfolio. Another option could be becoming Europe’s official digital czar, combining the enforcement powers of the Digital Services Act and the Digital Markets Act into a supranational digital enforcement agency, one EU official said.
Breton has shrugged off speculation on his long-term plans.
“All my life, I have been informed of my next potential job 15 minutes before,” he said last month.
Jakob Hanke Vela, Stuart Lau, Barbara Moens, Camille Gijs and Mark Scott contributed reporting.
In the United States, TikTok is a favorite punching ball for lawmakers who’ve compared the Chinese-owned app to “digital fentanyl” and say it should be banned.
Now that hostility is spreading to Europe, where fears about children’s safety and reports that TikTok spied on journalists using their IP locations are fueling a backlash against the video-sharing app used by more than 250 million Europeans.
As TikTok Chief Executive Shou Zi Chew heads to Brussels on Tuesday to meet with top digital policymaker Margrethe Vestager amid a wider reappraisal of EU ties with China, his company faces a slew of legal, regulatory and security challenges in the bloc — as well as a rising din of public criticism.
One of the loudest critics is French President Emmanuel Macron, who has called TikTok “deceptively innocent” and a cause of “real addiction” among users, as well as a source of Russian disinformation. Such comments have gone hand-in-hand with aggressive media coverage in France, including Le Parisien daily’s December 29 front page calling TikTok “A real danger for the brains of our children.”
New restrictions may be in order. During a trip to the United States in November, Macron told a group of American investors and French tech CEOs that he wanted to regulate TikTok, according to two people in the room. TikTok denies it is harmful and says it has measures to protect kids on the app.
While it wasn’t clear what rules Macron was referring to — his office declined to comment — the remarks added to a darkening tableau for TikTok. In addition to two EU-wide privacy probes that are set to wrap up in coming months, TikTok has to contend with extensive new requirements on content moderation under the bloc’s new digital rulebook, the DSA, from mid-2023 — as well as the possibility of being caught up in the bloc’s new digital competition rulebook, the Digital Markets Act.
In answers to emailed questions, France’s digital minister Jean-Noel Barrot said that France would rely on the DSA and DMA to regulate TikTok at an EU level, though he “remained vigilant on these ever-evolving models” of ad-supported social media. Barrot added that he “never failed to maintain a level of pressure appropriate to the stakes of the DSA” in meetings with TikTok executives.
Ahead of Chew’s visit to Brussels, Thierry Breton, the bloc’s internal market commissioner, warned him about the need to “respect the integrality of our rules,” according to comments the commissioner made in Spain, reported by Reuters. A spokesperson for Vestager said she aimed to “review how the company was preparing for complying with its (possible) obligations under our regulation.”
That said, the probes TikTok is facing deal with suspected violations that have already taken place. If Ireland’s data regulator, which leads investigations on behalf of other EU states, finds that TikTok has broken the bloc’s privacy rulebook, the General Data Protection Regulation, fines could amount to up to 4 percent of the firm’s global turnover. Penalties can be even higher under the DSA, which starts applying to big platforms in mid-2023.
Spying fears
And yet, having to fork over a few million euros could be the least of TikTok’s troubles in Europe, as some lawmakers here are following their U.S. peers to call for much tougher restrictions on the app amid fears that data from TikTok will be used for spying.
TikTok is under investigation for sending data on EU users to China — one of two probes being led by Ireland. Reports that TikTok employees in China used TikTok data to track the movements of two Western journalists only intensified spying fears, especially in privacy-conscious Germany. (TikTok acknowledged the incident and fired four employees over what they said was unauthorized access to user data.)
One of the loudest critics is French President Emmanuel Macron, who has called TikTok “deceptively innocent” and a cause of “real addiction” among users | Pool photo by Ludovic Marin/AFP via Getty Images
Citing a “lack of data security and data protection” as well as data transfers to China, the digital policy spokesman for Germany’s Social Democratic Party group in the Bundestag said that the U.S. ban on TikTok for federal employees’ phones was “understandable.”
“I think it makes sense to also critically examine applications such as TikTok and, if necessary, to take measures. I would therefore advise civil servants, but also every citizen, not to install untrustworthy services and apps on their smartphones,” Jens Zimmermann added.
Maximilian Funke-Kaiser, digital policy spokesman for the liberal FDP group in German parliament, went even further raising the prospect of a full ban on use of TikTok on government phones. “In view of the privacy and security risks posed by the app and the app’s far-reaching access rights, I consider the ban on TikTok on the work phones of U.S. government officials to be appropriate. Corresponding steps should also be examined in Germany.”
For Moritz Körner, a centrist lawmaker in European Parliament, the potential risks linked to TikTok are far greater than with Twitter due to the former’s larger user base — at least five times as many users as Twitter in Europe — and the fact that up to a third of its users are aged 13-19.
“The China-app TikTok should be under the special surveillance of the European authorities,” he wrote in an email. “The fight between autocratic and democratic systems will also be fought via digital platforms. Europe has to wake up.”
In Switzerland, lawmakers called earlier this month for a ban on officials’ phones.
Call for a ban
So far, though, no European government or public body has followed the U.S. in banning TikTok usage on officials’ phones. In response to questions from POLITICO, a spokesperson for the European Commission — which previously advised its employees against using Meta’s WhatsApp — wrote that any restriction on TikTok usage for EU civil servants would “require a political decision and will be based on the careful assessment of data protection cybersecurity concerns, and others.”
The spokesperson also pointed out that “there are no official Commission accounts” on TikTok.
A spokesperson for the European Parliament said its services “continuously monitor” for cybersecurity issues, but that “due to the nature of security matters, we don’t comment further on specific platforms.”
POLITICO reached out to cybersecurity agencies for the EU, the U.K. and Germany to ask if they had or were planning any restrictions or recommendations having to do with TikTok. None flagged any specific restrictions, which doesn’t mean there aren’t any. In Germany, for example, officials who use iPhones can’t use or download TikTok in the section of their phone where confidential data can be accessed.
The European Commission has previously advised its employees against using Meta’s WhatsApp | Kirill Kudryavtsev/AFP via Getty Images
For Hamburg’s data protection agency, one of 16 in Germany’s federal system, restricting TikTok on official phones would be a good idea.
“Based on what we know from the available sources, we share, among other things,the concerns of the U.S. government that you mentioned and would therefore welcome it appropriate for government agencies in the EU to refrain from using TikTok,” a spokesperson said.
This suggests that the most immediate public threat for TikTok in Europe is privacy-related. Of the two probes being conducted by Ireland’s privacy regulator, the one looking into child safety on the app is the closest to wrapping up, according to a spokesperson for the Irish Data Protection Commission.
Depending on the outcome of discussions between EU privacy regulators — the child safety probe is likely to trigger a dispute resolution mechanism — TikTok could face new requirements to verify age in the EU. The other probe, looking into TikTok’s transfers of data to China, is likely to wrap up around mid-year or toward the end of 2023 if a dispute is triggered, the spokesperson said.
Antoaneta Roussi contributed reporting.
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Nicholas Vinocur, Clothilde Goujard, Océane Herrero and Louis Westendarp
The transatlantic reset between Brussels and Washington is on life support.
After four years of discord and disruption under Donald Trump, hopes were high that Joe Biden’s presidency would usher in a new era of cooperation between Europe and the U.S. after he declared: “America is back.”
But when senior officials from both sides meet in Washington on Monday for a twice-yearly summit on technology and trade, the mood will be gloomier than at any time since Trump left office.
The European Union is up in arms over Biden’s plans for hefty subsidies for made-in-America electric cars, claiming these payments, which partly kick in from January 1, are nothing more than outright trade protectionism.
At the same time, the U.S. is increasingly frustrated the 27-country bloc won’t be more aggressive in pushing back against China, accusing some European governments of caving in to Beijing’s economic might.
Those frictions are expected to overshadow the so-called EU-U.S. Trade and Technology Council (TTC) summit this week. At a time when the Western alliance is seeking to maintain a show of unity and strength in the face of Russian aggression and Chinese authoritarianism, the geopolitical stakes are high.
Biden may have helped matters last Thursday, during a joint press conference with French President Emmanuel Macron, by saying he believed the two sides can still resolve some of the concerns the EU has raised.
“We’re going to continue to create manufacturing jobs in America but not at the expense of Europe,” Biden said. “We can work out some of the differences that exist, I’m confident.”
But, as ever, the details will be crucial.
It is unclear what Biden can do to stop his Buy American subsidies from hurting European car-markers, for example, many of which come from powerful member countries like France and Germany. The TTC summit offers a crucial early opportunity for the two sides to begin to rebuild trust and start to deliver on Biden’s warm rhetoric.
Judging by the TTC’s record so far, those attending, who will include U.S. Secretary of State Antony Blinken, will have their work cut out.
More than 20 officials, policymakers and industry and society groups involved in the summit told POLITICO that the lofty expectations for the TTC have yet to deliver concrete results. Almost all of the individuals spoke on the condition of anonymity to discuss sensitive internal deliberations.
U.S. Secretary of State Antony Blinken will be attending the TTC | Sean Gallup/Getty Images
Some officials privately accused their counterparts of broken promises, particularly on trade. Others are frustrated at a lack of progress in 10 working groups on topics like helping small businesses to digitize and tackling climate change.
“With these kinds of allies, who needs enemies?” said one EU trade diplomat when asked about tensions around upcoming U.S. electric car subsidies. A senior U.S. official working on the summit hit back: “We need the Europeans to play ball on China. So far, we haven’t had much luck.”
Much of the EU-U.S. friction is down to three letters: IRA.
Biden’s Inflation Reduction Act, which provides subsidies to “Buy American” when it comes to purchasing electric vehicles, has infuriated officials in Brussels who see it as undermining the multilateral trading system and a direct threat to the bloc’s rival car industry.
“The expectation the TTC was established to provide a forum for precisely these advanced exchanges with a view to preventing trade frictions before they arise appears to have been severely frustrated,” said David Kleimann, a trade expert at the Bruegel think tank in Brussels.
Biden’s room for flexibility is limited. The context for the subsidies and tax breaks is his desire to make good on his promise to create more manufacturing jobs ahead of an expected re-election run in 2024. The U.S. itself is hovering on the edge of a possible recession.
In addition, the U.S. trade deficit with the EU hit a record $218 billion in 2021, second only to the U.S. trade deficit with China. The U.S. also ran an auto trade deficit of about $22 billion with European countries, with Germany accounting for the largest share of that.
Washington has few, if any, meaningful policy levers at its disposal to calm European anger. During a recent visit to the EU, Katherine Tai, the U.S. trade representative, urged European countries to pass their own subsidies to jumpstart Europe’s electric car production, according to three officials with knowledge of those discussions.
“It risks being the elephant in the room,” said Emily Benson, a senior fellow at the Center for Strategic and International Studies, a Washington-based think tank, when asked about the electric car dispute.
After a push from Brussels, there were increasing signs on Friday that the TTC could still play a role. In the latest version of the TTC’s draft declaration, obtained by POLITICO, both sides commit to addressing the European concerns over Biden’s subsidies, including via the Trade and Tech Council. Again, though, there was no detail on how Washington could resolve the issue.
Politicians across Europe are already drawing up plans to fight back against Biden’s subsidies. That may include taking the matter to the World Trade Organization, hitting the U.S. with retaliatory tariffs or passing a “Buy European Act” that would nudge EU consumers and businesses to buy locally made goods and components.
Officials and business leaders pose for a photo during the TTC in September 2021 | Pool photo by Rebecca Droke/AFP via Getty Images
Privately, Washington has not been in the mood to give ground. Speaking to POLITICO before Biden met Macron, five U.S. policymakers said the IRA was not aimed at alienating allies, stressing that the green subsidies fit the very climate change goals that Europe has long called on America to adopt.
“There’s just a huge amount to be done and more frankly to be done than the market would provide for on its own,” said a senior White House official, who was not authorized to speak on the record. “We think the Inflation Reduction Act is reflective of that type of step, but we also think there is a space here for Europe and others, frankly, to take similar steps.”
China tensions
Senior politicians attending the summit are expected to play down tensions this week when they announce a series of joint EU-U.S. projects.
These include funds for two telecommunications projects in Jamaica and Kenya and the announcement of new rules for how the emerging technology of so-called trustworthy artificial intelligence can develop. There’s also expected to be a plan for more coordination to highlight potential blockages in semiconductor supply chains, according to the draft summit statement obtained by POLITICO.
Yet even on an issue like microchips — where both Washington and Brussels have earmarked tens of billions of euros to subsidize local production — geopolitics intervenes.
For months, U.S. officials have pushed hard for their European counterparts to agree to export controls to stop high-end semiconductor manufacturing equipment being sent to China, according to four officials with knowledge of those discussions.
Washington already passed legislation to stop Chinese companies from using such American-made hardware. The White House had been eager for the European Commission to back similar export controls, particularly as the Dutch firm ASML produced equipment crucial for high-end chipmaking worldwide.
Yet EU officials preparing for the TTC meeting said such requests had never been made formally to Brussels. The draft summit communiqué makes just a passing reference to China and threats from so-called non-market economies.
Unlike the U.S., the EU remains divided on how to approach Beijing as some countries like Germany have long-standing economic ties with Chinese businesses that they are reluctant to give up. Without a consensus among EU governments, Brussels has little to offer Washington to help its anti-China push.
“In theory, the TTC is not about China, but in practice, every discussion with the U.S. is,” said one senior EU official, speaking on the condition of anonymity. “If we talk with Katherine Tai about Burger King, it has an anti-China effect.”
Gavin Bade, Clea Caulcutt, Samuel Stolton and Camille Gijs contributed reporting.
