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The clock appears to be ticking for US Tech Giants wanting to do business in the EU

The EU Commission yesterday published its European Strategy for Data. In this report, the Commission explores the need for legislative action to push tech and data companies towards sharing and pooling data.

US tech companies such as Facebook, Amazon and Google are able to leverage significant commercial advantage by guarding the data they generate from their customers and users, whereas businesses in other sectors (such as the financial sector) are obliged to allow third parties to have access to their customer data. Forcing tech companies to share their data may be the antitrust panacea that will allow businesses to operate without unfair competitive advantage. 

The reaction of US tech giants to the EU stance is noteworthy. Earlier this week, Mark Zuckerberg unsuccessfully attempted a charm offensive on senior EU officials who wanted Facebook to do more to police online content on its social media platform.

At the same time, Spain yesterday followed France and other EU Member States by introducing a 3% tax on large internet and technology firms. The move would tax online ads, trades brokered on digital platforms and the sale of user data by tech companies that have an annual turnover of more than US$850 million and which generate more than $3 million from Spanish users. Spain hopes to raise close to EUR 1 billion a year in extra tax revenue. However, the recent proposal by France to introduce a similar tax was met with ire from US President Donald Trump who threatened France with reprisal tariffs on wine exports. The tensions between the White House and the French administration led to France announcing that the tax would not be implemented until the end of 2020. Spain has therefore also indicated that its tax will not become effective until the end of this year, in the hopes that the OECD will by then have formulated an internationally agreed implementation of this tax.

With the pressure growing on how tech companies make their EU customer data available and how they are taxed in the EU, the competitive landscape in this sector appears to be changing. Will the US react in a protectionist manner so as to give rise to increased trade tensions (let alone a trade war) with the EU?

the European Union unveiled plans to create a single market for data that will help its companies compete on the next round of tech innovations and curb the power of data giants such as Facebook (FB) and Google (GOOGL). Officials also released a paper on artificial intelligence, proposing first-of-their-kind rules to govern the technology's use.

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