Book Review: Digital Empires. The Global Battle to Regulate Technology (2023)

Bradford, Anu (2023). Digital Empires. The Global Battle to Regulate Technology. Oxford: Oxford University Press, 599 pages.

By Matthias Finger

This impressive 600-page book (of which 1/3 are footnotes) thoroughly and systematically addresses an important and timely topic. The author writes from a regulatory-policy perspective and, without taking sides, has chosen a geo-political angle. On this topic it is certainly the best book currently available and, as such, is a must-read for everyone who is trying to understand what is happening globally, in matters of regulating digitalization.

Bradford identifies, describes, and analyses her perception of the three currently prevailing dominant and competing regulatory models in matters of digitalization: she mainly covers the regulation of data, of digital platforms and, more generally, of the internet. These are the models put forth by the three “digital empires” that are the United States (US), China, and the European Union (EU), as they have the power to make rules beyond their borders. Each of these models is defined in relationship to three “poles”, namely their citizens, the state, and the market. Consequently, the US regulatory model is said to be mostly market-driven, the Chinese model is mostly state-driven, and the EU model is mostly citizen-driven (or citizen-rights driven). The excellent introductory chapter of the book serves as an executive summary that is basically self-explanatory and can be read on its own for an overview and an understanding of the book’s main arguments.

The book is logically structured into three parts. In the first part, each of these three imperial regulatory models is described. In the second part, the rivalries between the models (US versus China, US versus EU) and those between the tech companies and the regulatory models are described in detail. In part three, the author outlines the likely future, on the global scene, of each of these three models. All this is done in great detail, in a thoroughly documented manner, with pedagogical skill and as objectively as possible. Only in the conclusion does the author become a little more personally engaged.

The American Market-Driven Model and Its Decline

The American market-driven regulatory – or rather non-regulatory – model is historically the first one to emerge and basically “provided the foundation for the global digital economy as it exists today” (page 7). The origins of this model can and must be traced back not only to Silicon Valley but also to the so-called “Californian ideology” (258), itself a combination of counter-cultural ideals, techno-optimism, and even digital techno-libertarianism (e.g., “internet revolution”, “internet freedom”). This ideology, together with venture capitalists, Stanford University, and the US government also favored the emergence and global expansion of big tech (as of the 1970s) and of digital platforms (as of the 1990s).

Domestically, these companies were allowed to unleash their business models – characterized by “excessive market power, extractive data practices” (263) (thus disrespecting privacy and national sovereignty) and polarization (66) without restrictions, due to laissez-faire policies and non-existing regulations. According to Bradford, in this US market-driven model, “tech companies, not governments, largely set the rules of engagement and thus act as institutions of governance” (259). This is because “government is rarely the solution, technology is” (39). If regulation is needed at all, it “should be strictly confined to addressing market failures” (37). These pro-market ideas and ideals have even “penetrated US antitrust law, resulting in a light regulatory touch and contributing to highly concentrated technology markets” (50), as “the US government has let all (these) mergers proceed unchallenged” (51). This “commercial non-regulation principle” (in the case of digital markets) has its equivalent on the content side in the “anti-censorship principle” (265). No other law, writes the author, “better captures the spirit of the American market-driven regulatory model than Section 230 of the Communications Decency Act (CDA) of 1996. The law provides immunity for online intermediaries, precluding these companies from being legally liable for any third-party content that they host on their platforms” (43); “the CDA remains the crown jewel of the US’s market-driven regulatory model to this day” (50). Since then, no other comprehensive federal privacy law has emerged from Congress (45). Consequently, “the US is a global outlier in not having a federal privacy law, even as regulating data privacy has become a standard feature of legal regimes around the world” (51).

On the international front “the global expansion of US tech companies benefited from a strong backing of the US government” (265), because “in the late 1990s and early 2000s the US was successful in obtaining commitments from several of its allies, who agreed to promote the nonregulatory market driven global e-commerce model” (266). The US government also provided “regulatory assistance” and deliberately side-lined the UN, i.e., any kind of multi-lateral effort to regulate digital platforms and big tech. This helped big tech develop globally, while spreading the market-driven model, the non-censorship principle and the political internet-freedom agenda, along with Silicon Valley and, more generally, American values (272).

But “the harmful effects of these tech giants’ business practices on foreign economies and societies are increasingly felt abroad” (280). “Governments around the world come to realize that the digital economy – as conceived by the US – was too free and too dominated by US interests and companies” (289). Indeed, “uncensored platforms did not simply produce freedom as the early American techno-optimistic view had predicted — they also cultivated an online public square littered with hatred, violence and disinformation” (288). In short, “the emancipatory promise behind the Californian ideology has failed to materialize, raising a question whether a self-governing cyberspace can ultimately deliver freedom and societal progress, as the proponents of the market driven model have argued” (64). Furthermore, “the US government conducts extensive digital surveillance, both domestically and internationally … in partnership with major US telecom and internet companies” … “Even the Europeans that had generally supported the US’s internet freedom agenda felt threatened by the US surveillance apparatus … all the more because surveillance operations were targeted not only at authoritarian countries, but also at the US’s friends and allies” (285).

In short, “the American market-driven model can be praised for its ability to nurture tech companies, but that economic benefit comes at the expense of risking fundamental rights, human dignity, political autonomy and democracy” (8). The Chinese and the European regulatory models and more generally “the wave of tech regulation proliferating around the world can thus be seen as a reaction to the American regulatory model and the exportation of US tech companies’ private power” (288). In summary, the backlash against this American market-driven model has accelerated its decline.

The Chinese State-Driven Regulatory Model and Its Infrastructure Power

The Chinese regulatory model has gradually emerged as a reaction to the US market-driven model. Like the US model it is profoundly techno-optimistic, but unlike the US model it “seeks to leverage technology to fuel the country’s economic growth and development while maintaining social harmony and control over citizens’ communications” (69). Also, unlike the US model it strongly focuses on digital infrastructure technologies – so-called “hard-tech” – such as semiconductors, telecom, metering, robotics, and smartphones (e.g., ZTE, founded 1985; Huawei, 1987; JD, 1998; Tencent, 1998; Xaomi, 2010). this also includes media, retail, financial, online search, ride-hailing, and food delivery platforms (e.g., Alibaba, 1999; Baidu, 2000; Weibo, 2009; Meituan, 2010; WeChat, 2011; Didi Chuxing, 2012; Alipay, 2014; TiTok, 2016).

At first, the Chinese approach to digitalization was very similar to the US approach, as the government wanted to imitate Silicon Valley, albeit more proactively: “the birth of China’s tech industry owes much to the financial model created by the US venture capital industry“ (90); “US investors not only provided the capital but also imported Silicon Valley’s equity culture into China” (91) and the government displayed et very “lax approach to regulation, as it was adamant to letting the industry flourish” (70). Chinese tech entrepreneurs came with Silicon Valley experience and were supported by proactive industrial development policies and technology-transfer agreements and, of course, benefitted from a huge domestic market. In short “the Chinese state-driven regulatory model rests on a solid capitalist foundation – akin to the American market-driven regulatory model – and the initial fortunes of Chinese tech companies can be traced back to investors in Silicon Valley and not to political leaders in Beijing” (93-94). In other words, until the early 2010s, the Chinese approach was very similar to the industrial-policy approach promoted by Korea and Japan.

The techno-authoritarian turn, which led to today’s state-driven regulatory model, came much later; notably under President Xi’s leadership since 2013, hence leading to internet censorship, the promotion of internet sovereignty, the blocking of foreign websites, the development of internet surveillance, the roll-out of smart cities, the implementation of the so-called social-credit system, etc. This is, in part, a reaction to the US digital companies’ global dominance but also to the unfolding of the much broader geopolitical conflict between China and the US, “including the measures the US government has taken as part of the US-China tech war” (96). Many of these authoritarian measures by the Chinese government are implemented due to the help of the Chinese and sometimes even of the foreign tech companies.

Even more recent is the regulatory turn taken by the Chinese government focusing on consumer protection, data abuses, price discrimination, merger control, and monopoly regulation, as evidenced for example by the 2016 Cybersecurity law, the 2016 comprehensive data protection law (PILP), as well as many “fines, bans, restructuring, or regulatory mandates” in the recent two to three years (95). Much of what the author calls “regulatory crackdown” is actually inspired by EU legislation and is mainly motivated by social considerations, such as “Beijing’s growing attention to wealth redistribution” (95). According to Bradford, “China must make resolute efforts to prevent polarization, as Chinese people feel that they are manipulated by tech companies through algorithms or otherwise exploited by tech monopolies” (96). Furthermore, “the Chinese government also wants to restore its own control over an industry that has grown so large that it threatens the power and influence of the state” (96). For example, “a significant number of financial transactions are now moving onto platforms that are not state-owned and that fall outside financial regulation” (96) and “the government would want the data that these companies control in order to better manage society” (96).

If the US government supports their digital companies, primarily due to their internet freedom agenda, the Chinese government is “expanding its global influence primarily by supplying digital infrastructures” (290) under the umbrella of their Digital Silk Road that is part of China’s Belt and Road Initiative. Beneficiaries of such support are companies that, such as Huawei and ZTE, provide hard tech such as telecom equipment, cloud services, undersea cables, satellite navigation systems, surveillance technologies. All of these infrastructure technologies are not necessarily techniques in which the US companies excel. But this, of course, also provides Chinese digital platforms and the government with access to data far beyond its national borders. All of this is further accompanied by global standardization efforts, whereby “national (i.e., Chinese) standards become global standards” (291), by working through UN bodies, namely the International Telecommunications Union (ITU), the International Standardization Organization (ISO), and the International Electrotechnical Commission (IET), as opposed cooperating with private-sector driven standardization efforts advocated by the US government.

The European Rights-Driven Regulatory Model and Its Moral Appeal

The EU, as well as many other countries that follow in its footsteps, has reacted to the American market-driven model and the consequences (287), just like China did. In doing so, the EU developed “a distinctly European way of regulating” (105) by “embracing a human-centric approach to regulating the digital economy”; where “regulatory intervention is needed to uphold the fundamental rights of individuals, preserve democratic structures of society, and ensure a fair distribution of the benefits from the digital economy” (9).

Whereas the US and China have produced big tech companies, the EU has produced and continues to produce regulations addressing the above concerns. Their first landmark regulation is GDPR, the General Data Protection Regulation that entered into force in 2018, with its focus on privacy, the protection of personal data and, to a certain extent, individuals’ control over personal data. Already back in 2016, the EU produced a non-binding code of conduct signed by the major platforms on content moderation, the so-called “hate-speech code”. Since 2022, the Digital Services Act (DSA) regulates online intermediaries and platforms (marketplaces, social networks, content-sharing platforms, app stores, and online travel and accommodation platforms) for transparency and accountability. In 2019, the so-called Copyright Directive sought to “rebalance the relationship between online platforms (that display news content) and the news industry (that generates content)” (122). Then, also in 2022, the Digital Markets Act (DMA) began to target so-called “gatekeeper” platforms in order to make them behave more fairly. Bradford highlights, in particular, the inclusion of the notion of “fairness” into competition regulation that traditionally was focused only on market efficiency, a notion applied in the many cases of the Commission against the big US platforms over the past years. The author could have also mentioned the Data Governance and the Data Acts (2022 and 2023) that, in order to accelerate the internal EU (data) market, aim to facilitate the exchange of data. But, she does mention the AI Act of 2024 that establishes a common regulatory framework for artificial intelligence.

Whereas the American and the Chinese models are actively exported by their respective governments, the European regulatory model spreads globally due to the so-called Brussels Effect, as the “rules generated by Brussels are gradually adopted by governments around the world due to growing domestic corporate support for those rules“ (332). For example, versions of the GDPR have been adopted by California and other US states and are even in China’s Personal Information Protection Law (PIPL). Similar developments have taken place in the areas of content moderation (337) and antitrust regulation (342). According to Bradford, “Antitrust regulators around the world are increasingly turning their sights on the tech industry, following the European Commission’s lead in challenging the business practices of leading US tech companies” (344). For example, “the EU’s multiple investigations into Google since 2000 have paved the way for agencies in other jurisdictions to act” (344). As a result, Apple, Amazon, Google and Meta have faced and are facing over seventy antitrust investigations around the world (345). The DMA is followed by the UK’s Competition and Markets Authority, along with Japanese, Korean and even Chinese authorities; “China is moving toward the regulatory approach that the EU has pioneered over the last decade” (348). I “AI regulation may well be the next frontier of the Brussels effect” (348); and “even the US may now be inching toward the European rights-driven approach on regulating AI” (351), not the least because the EU’s AI Act could help stem Chinese ambitions in this matter. The author recommends that, “given the difficulties of evading the EU’s regulatory influence, foreign governments’ best strategy would seem to be regulatory cooperation with the EU” (359). She addresses this recommendation also to the US government.

“Imperial Rivalries” and Critical Assessment

The second part of the book is devoted to “rivalries”. First, (in Chapter 4) there are the conflicting obligations US tech companies face in China and the US, which shows that “the US tech companies repeatedly acquiesce to the Chinese government’s demands in an effort to operate in China’s large and dynamic tech market” (161). However, the US government is also “increasingly retreating from its market-driven principles and allowing national security considerations to dominate policymaking” (164). Chapters 5 pertains to the broader geo-political “rivalry” – or rather the “trade and technology war” (185), if not the “arms race to bolster technological self-sufficiency” (207) – between the US and China –which big tech and digitalization is entirely part of and which leads to so-called “decoupling”, “digital protectionism everywhere” (187) and, ultimately, “global techno-nationalism”, “techno-protectionism” and “digital nationalism” (212). In Chapter 6, Bradford identifies and discusses the conflicts and evolving relationship between the US and the EU in matters of regulation, that is to say moving from ”hostility” to a little bit more of “convergence”. Nevertheless, I find the author’s conclusion overly optimistic and frankly problematic, when she wishes for “a new era of transatlantic digital policy where the US and the EU are prepared to put aside their mutual regulatory battles in order to focus on the battle that many argue matters the most: the joint battle to defeat digital authoritarian norms embedded in the Chinese state-driven regulatory model and to defend liberal democracy as a foundation of the digital economy” (254).

This leads us directly to the conclusion, in which Bradford displays more of her personal views. Although the entire book is extremely well documented and argued in very nuanced ways, in her conclusion, the author makes some very clear statements while also revealing her American / anti-China bias. On the one hand, “the US is losing the horizontal battle to China and the EU” (361): “in the global contest for influence, the American market-driven regulatory model is losing its allure and retreating” (279). Consequently, for the US government, digital policy and regulation is no longer about creating a global market for big US tech companies carrying the freedom agenda to the entire planet. Rather, it is now about combatting the rise of digital authoritarianism around the world, as evidenced by the recent (2022, Biden administration) creation of the Bureau Cyberspace and Digital Policy within the US State Department. “This has left the US government in a position where its recent foreign policy agenda has been primarily focused on countering China’s digital authoritarian vision – without however, offering an affirmative and coherent alternate vision of its own” (279).

Unfortunately, Bradford also suggests this when she reduces digital policymaking and regulation to a battle between techno-democracies (under US leadership but with an EU regulatory approach) and techno-autocracies (under Chinese leadership), as “authoritarian governments are turning to the Chinese regulatory model” (364) and “democratic governments (including the US government) are turning to the European regulatory model (366). In other words, digitalization, technological development, tech policies and regulations, including the EU’s regulatory approach to digitalization, become part of the New Cold War, this time between the “West” (freedom) and the “Rest” (authoritarianism), to quote Niall Ferguson. Although this might well be the US agenda, I am personally not convinced that this is in the interest of the research community, big tech – both American and Chinese; nor is it, in my opinion, in the interest of Europe or India for that matter, and even less so in the interest of humanity.

This edition of the Digital Governance Book Review was authored by: Matthias Finger, C4DT.

Image credit: Cover of Digital Empires. The Global Battle to Regulate Technology by Anu Bradford, published by OUP.