The following is an excerpt from the book Digital Empires – The Global Battle to Regulate Technology by Anu Bradford, published by Oxford University Press and reprinted here by permission. Check out today’s Stigler Center webinar with Bradford in conversation with Filippo Lancieri about her new book.
Today, there are three dominant digital powers—the US, China, and the EU—who can metaphorically be thought of as “digital empires.” These modern empires of the internet era are the leading technology, economic, and regulatory powers, each with the ambition and capability to shape the global digital order toward their interests and values. They have each developed a distinct governance model for their domestic digital economies, consistent with their different ideological commitments. Not unlike the empires of the past, they have further exported their domestic models in an effort to expand their respective spheres of influence, thus pulling other countries into the orbits of the American, Chinese, or European digital empires. The digital empires find their closest analogue, not in the former territorial empires, but in various informal empires of the twentieth century that projected economic, military, and cultural power across their borders, creating power asymmetries that vested them with influence over foreign societies. Today’s digital empires are primarily exporting their tech companies, technologies, and rules governing those technologies, thus shaping countries and individuals that fall under their influence toward the norms and values they espouse.
Each digital empire holds a different vision for the digital economy, which is reflected in the regulatory models they have adopted at home and promoted abroad. These three leading regulatory models could be thought of as representing three “varieties of digital capitalism”—drawing on different theories about the relationship between markets, the state, and individual and collective rights. As described throughout this book, the US has pioneered a largely market-driven model, China a state-driven model, and the EU a rights-driven model. Each of these regulatory models involves societal choices that rest on diverging economic theories, political ideologies, and cultural identities. In deciding how to regulate the digital economy, governments in the three jurisdictions have all had to balance their support of technological innovation with the implications those technologies have for civil liberties, the distribution of wealth, international trade, social stability, and national security, among other key policy concerns. This balancing effort has led to some similarities but also notable differences across the leading regulatory models. As each model is associated with contested policy choices that subject them to criticism—each for different reasons—there is no global consensus on which of the three dominant regulatory models best serves the goal of building a vibrant and resilient digital economy and society.
The US has traditionally followed a market-driven regulatory model, which has provided the foundation for the global digital economy as it exists today. The American regulatory approach centers on protecting free speech, the free internet, and incentives to innovate. It is characterized by its discernible techno-optimism and relentless pursuit of innovation. The US government has historically viewed the internet as a source of economic prosperity and political freedom and, consequently, as a tool for societal transformation and progress. The American market-driven model exhibits uncompromising faith in markets and embraces a limited role for the government. According to this techno-libertarian view, government intervention not only compromises the efficient operation of markets; it also undermines individual liberty. Thus, while the US’s commitment to innovation and growth provides the economic rationale against government intervention, its commitment to individual liberty and freedom is often invoked as a political reason to limit the government’s role. Minimizing government interference is seen as essential to producing a vibrant democratic society characterized by free speech and the engagement of diverse voices in civic life. From this perspective, the government is only expected to step in to protect national security—on cybersecurity issues, for example, the US government has a role to play alongside tech companies.
Few would dispute that many of the prized innovations that shape our everyday lives today can be traced to Silicon Valley—innovations that the American market-driven model has directly facilitated. At the same time, privacy advocates and other critics argue that this zealous pursuit of innovation has come at the expense of protecting individual internet users’ rights. The EU has joined these advocates in arguing that, absent regulatory safeguards, public and private surveillance thrive under the US model and severely compromise individuals’ rights to privacy and political autonomy. Seen from this vantage point, a world governed by tech companies’ business models subjects internet users to behavioral advertising and manipulation that subvert individual choice, liberty, and self-governance. By allowing for this, the US model thus compromises individuals’ abilities to exercise their agency and participate in democracy. Several recent high-profile scandals illustrate the problem, including the Snowden revelations and the Cambridge Analytica scandal mentioned above. The EU and other critics of the market-driven regulatory model can also point out how Facebook, Twitter, YouTube, and other platforms have repeatedly failed to remove dangerous disinformation on topics ranging from the COVID-19 pandemic to democratic elections. And they can replay the images of the January 6, 2021, insurrection at the US Capitol, which originated in a rampant social media–fueled disinformation campaign about a stolen election. Consequently, when looking strictly at innovation and economic growth, 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.
In contrast to the American market-driven regulatory model, the Chinese regulatory model rests on a state-driven vision for the digital economy. The Chinese government seeks to maximize the country’s technological dominance while maintaining social harmony and control over its citizens’ communications. China is determined to leverage technology to fuel its economic growth and development. It is currently engaged in an unprecedented state-led effort geared toward becoming the world’s leading technology superpower. In addition to pursuing this economic goal, the government is focused on tightening the political grip of the Chinese Communist Party (CCP) by deploying the internet as a tool for control, surveillance, and propaganda. To achieve these goals, the CCP has harnessed the power of its private tech companies: in return for the initially lax regulatory approach that helped them grow and flourish, Chinese tech companies have acted as the CCP’s surrogates, performing the surveillance and control functions of the state over their users. However, the Chinese government is increasingly adopting the view that the largest tech companies have grown too powerful. It has recently leveraged its antitrust laws to rein in domestic giants such as Alibaba and Tencent—the opening salvo of an unprecedented assault on its domestic tech industry. Yet even this newest turn in digital regulation serves the fundamental goal of the Chinese government: cementing the state’s control of the digital economy as a defining feature of China’s regulatory model.
Like the US, China has been tremendously successful in fostering technological innovations, allowing leading tech companies such as Alibaba, Tencent, and Huawei to emerge. At the same time, the Chinese state-driven regulatory model has also come under increasing criticism in democratic countries, as the Chinese government systematically harnesses the internet as a tool for censorship and political control. Many foreign governments, including the US and the EU, condemn the Chinese government’s policy of banning and filtering online content on a large scale—a policy colloquially known as the Great Firewall. Many foreign companies have become a direct casualty of this policy, including Google, Meta, and Twitter, which have largely abandoned the Chinese market due to the government’s extensive censorship policies. China’s large-scale deployment of facial recognition techniques for law enforcement purposes is also widely condemned abroad. Its social credit scheme, which rates citizens for their trustworthiness based on issues such as paying taxes or committing a crime, is similarly met with deep suspicion. These examples illustrate how the Chinese government has converted the internet from a tool for advancing democracy to an instrument in service of autocracy. Thus, China’s practice of deploying data as a tool for social control represents a stark departure from the shared European and American view where the internet is seen as key to promoting individual liberty and advancing freedom in society. Through its model, China has shown the world how freedom is not inherent in the character of the internet, but rather vulnerable to political choices by those with the power to limit that freedom.
The European regulatory model differs from both the American and Chinese models in being distinctly rights-driven. The EU embraces a humancentric approach to regulating the digital economy where fundamental rights and the notion of a fair marketplace form the foundation for regulation. According to this view, regulatory intervention is needed to uphold the fundamental rights of individuals, preserve the democratic structures of society, and ensure a fair distribution of the benefits from the digital economy. Technology must be harnessed toward human empowerment and with the aim of safeguarding the political autonomy of digital citizens. In contrast to the US model, which focuses on protecting free speech as the fundamental right, the EU model seeks to balance the right to free speech with a host of other fundamental rights, including human dignity and the right to privacy. In contrast to the Chinese model—which also reserves a strong role for the state in steering the digital economy—the EU model is geared at enhancing, not curtailing, the rights of citizens vis-à-vis both tech companies and the state. The EU’s regulatory model also emphasizes that digital transformation needs to be firmly anchored in the rule of law and democratic governance. Whereas the American market-driven model often emphasizes how governments do not understand technology and should hence refrain from regulating it, the European rights-driven model is more concerned that tech companies do not understand the pillars of constitutional democracy or the fundamental rights of internet users. As a result, under the European regulatory model, the government must steer the digital economy with the goal of protecting those rights they view as foundations of a liberal democratic society.
Civil rights advocates often praise the EU for its commitment to fundamental rights, dignity, and democracy, including its efforts to steer the digital economy toward those values through regulation. At the same time, many industry advocates and companies in both the EU and foreign markets—particularly the US—view the European rights-driven regulatory model in a less positive light. They describe it as overly protective, compromising tech companies’ incentives to innovate, and thereby curtailing the technological and economic progress that societies depend on. Few successful tech giants are emerging from Europe, which is often attributed to the EU’s protective regulations that interfere with tech companies’ innovative zeal. Many US politicians, tech companies and other proponents of the free speech ideals underlying the American regulatory model also allege that the European rights-driven model risks undermining free speech and stifling public debate. In particular, US tech companies like Google have argued that the EU’s approach toward content moderation—including its online hate speech rules and the “right to be forgotten” provision in the EU’s General Data Protection Regulation (GDPR)—could to lead to harmful censorship. In other words, these critics argue that the EU overdoes its rights-driven regulation, damaging economic progress and political freedom in the process.
Even this cursory overview of the three leading regulatory models reveals significant distinctions among them. However, the models also have elements in common. Despite prioritizing the market, the state, or individual and collective rights differently, each model ultimately maintains aspects of each. Markets do not always win in the US; the state does not control everything in China; and the rights of internet users do not always prevail over other policy imperatives in the EU. Nevertheless, when faced with critical policy trade-offs and the balancing of various interests in regulating the digital economy, each jurisdiction often falls back on those foundational principles that are intrinsic to their distinctive regulatory models: the US tends to draw on its pro-market instincts to limit government intervention, China responds in ways that ensure the government’s interests are protected, and the EU acts in a manner that elevates the rights of digital citizens to the heart of its policymaking. It is these persistent differences across the three models that fuel tension and conflict, paving the way for the contested battles that have become a defining feature of today’s digital economy.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
