The Trump administration is forming a coalition to counter China’s dominant control of critical minerals and emerging power as a center of AI and other tech sectors. The administration plans to launch the coalition of partners with the signing Friday of the Pax Silica Declaration, uniting Singapore, Australia, Japan, South Korea and Israel in a collaboration intended to address deficits in critical mineral access edging out China’s massive investment in its critical minerals and tech sector. The administration is actively looking to enlist other countries to join the group. The initiative underscores the degree to which the Trump administration considers China’s near monopoly in rare earths – minerals that are critical to civilian and military applications – and dominance of other parts of the global supply chain, as a significant threat. Beijing has wielded its dominance of the sector through export restrictions intended to hit back against the Trump administration’s aggressive tariff policy on Chinese imports. The declaration also reflects U.S. concern about China’s massive investment in artificial intelligence and quantum computing that could give it a competitive edge in the 21st century economy. “It’s an industrial policy for an economic security coalition and it’s a game changer because there is no grouping today where we can get together to talk about the AI economy and how we compete with China in AI,” Helberg said. “By aligning our economic security approaches, we can start to have cohesion to basically block China’s Belt and Road Initiative — which is really designed to magnify its export-led model — by denying China the ability to buy ports, major highways, transportation and logistics corridors.” Helberg said that the Trump administration aims to expand the coalition from the initial five countries that sign the declaration to include more allies and partners with mineral, technological and manufacturing resources. The signing of the declaration kicks off the administration’s one-day Pax Silica Summit, which will include officials from the European Union, Canada, the Netherlands and the United Arab Emirates. The summit will feature discussions about cooperation in areas such as advanced manufacturing, mineral refining and logistics. “This grouping of countries will be to the AI age what the G7 was to the industrial age,” Helberg said. “It commits us to a process by which we’re going to cooperate on aligning our export controls, screening of foreign investments, addressing anti-dumping but with a very proactive agenda on securing choke points in the global supply chain system.”

LONDON — Australia hopes its teenage social media ban will create a domino effect around the world. Britain isn’t so sure.  As a new law banning under-16s from signing up to platforms such as YouTube, Instagram and TikTok comes into force today, U.K. lawmakers ten thousand miles away are watching closely, but not jumping in. “There are no current plans to implement a smartphone or social media ban for children. It’s important we protect children while letting them benefit safely from the digital world, without cutting off essential services or isolating the most vulnerable,” a No.10 spokesperson said Tuesday. Regulators are tied up implementing the U.K.’s complex Online Safety Act, and there is little domestic pressure on the ruling Labour Party to act from its main political opponents.  While England’s children’s commissioner and some MPs are supportive of a ban, neither the poll-topping Reform UK or opposition Conservative Party are pushing to mirror moves down under.  “We believe that bans are ineffective,” a Reform UK spokesperson said.  Even the usually Big Tech skeptic lobby groups have their doubts about the Australian model — despite strong public support to replicate the move in the U.K. Chris Sherwood, chief executive of the NSPCC, which has led the charge in pushing for tough regulation of social media companies over the last decade, said: “We must not punish young people for the failure of tech companies to create safe experiences online.  “Services must be accountable for knowing what content is being pushed out on their platforms and ensuring that young people can enjoy social media safely.” Andy Burrows, who leads the Molly Rose Foundation campaign group, argues the Australian approach is flawed and will push children to higher-risk platforms not included in the ban.  His charity was set up in 2018 in the name of 14-year-old Molly Russell, who took her own life in 2017 while suffering from “depression and the negative effects of online content,” a coroner’s inquest concluded.  Regulators are tied up implementing the U.K.’s complex Online Safety Act, and there is little domestic pressure on the ruling Labour Party to act from its main political opponents. | Ian Forsyth/Getty Images “The quickest and most effective response to better protect children online is to strengthen regulation that directly addresses product safety and design risks rather than an overarching ban that comes with a slew of unintended consequences,” Burrows said.  “We need evidence-based approaches, not knee-jerk responses.” AUSSIE RULES Australia’s eSafety commissioner Julie Inman Grant, an American tasked with policing the world’s first social media account ban for teenagers, acknowledges Australia’s legislation is the “most novel, complex piece of legislation” she has ever seen. But insists: “We cannot control the ocean, but we can police the sharks.” She told a conference in Sydney this month she expects others to follow Australia’s lead. “I’ve always referred to this as the first domino,” she says.  “Parents shouldn’t have to fight billion-dollar companies to keep their kids safe online — the responsibility belongs with the platforms,” Inman Grant told Australia’s Happy Families podcast.  But the move does come with diplomatic peril. Inman Grant has not escaped the attention of the White House, which is pressuring countries to overturn tech regulations it views as unfairly targeting American companies.  U.S. congressman and Trump ally Jim Jordan has asked Inman Grant to testify before the Judiciary Committee he chairs, accusing her of being a “zealot for global [content] takedowns.” She hit back last week, describing the request as an example of territorial overreach.  The social media account ban for under-16s is the latest in a line of Australian laws that have upset U.S. tech companies. It was the first to bring in a news media bargaining code to force Google and Facebook to negotiate with publishers, and was the first major economy to rule out changing laws to let AI companies train on copyrighted material without permission. The U.K. has also upset the White House with its existing online safety measures, and the Trump administration said earlier this year it is monitoring freedom of speech concerns in the U.K. Australia is used to facing down the Big Tech lobby, explains Daniel Stone, who advised the ruling Labor Government on tech policy. “Julie has the benefit of knowing the [political] cabinet is fully supportive of her position,” he said. “It defines what’s permissible across the whole system.”  The social media account ban for under-16s is the latest in a line of Australian laws that have upset U.S. tech companies. | Justin Sullivan/Getty Images “If there is a lesson for the U.K., it is that you don’t have a strong regulator unless you have a strong political leader with a clear and consistent agenda,” Stone adds.  “Australia has its anxieties, too, about pushing U.S. tech companies, but they carry themselves with confidence,” said Stone. “You have to approach Trump from a position of strength.”  Rebecca Razavi, a former Australian diplomat, regulator and visiting fellow at the Oxford Internet Institute, agrees. “The thinking is, we’re a mid-sized economy and there’s this asymmetry with tech platforms dominating, and there’s actually a need to put things in place using an Australian approach to regulation,” she said.  Other countries, including Brazil, Malaysia and some European countries are moving in a similar direction. Last month the European Parliament called for a continent-wide age restriction on social media.  SLOW DOWN Others are biding their time.  The speed at which Australia’s social media ban was approved by parliament means that many of its pitfalls have not been explored, Razavi cautioned.  The legislation passed through parliament last December in 19 days with cross-party and wide public support. “It was really fast,” she said. “There was a feeling that this is something that parents care about. There’s also a deep frustration that the tech companies are just taking too long to make the reforms that are needed.”  But she added: “Some issues, such as how it works in practice, with age verification and data privacy are only being addressed now.”  Lizzie O’Shea, a human rights lawyer and founder of campaign group Digital Rights Watch, agreed. “There was very little time for consultation and engagement,” she said. “There has then subsequently been a lot of concerns about implementation. I worry about experimenting on particularly vulnerable people.”  For now, Britain and the world is watching to see if Australia’s new way to police social media delivers, or becomes an unworkable knee-jerk reaction. 

LISBON — Ursula von der Leyen’s European Commission should continue to enforce its digital rules with an iron fist despite the outcry from U.S. officials and big tech moguls, co-chair of the Greens in the European Parliament Bas Eickhout told POLITICO. As Green politicians from across Europe gather in the Portuguese capital for their annual congress, U.S. top officials are blasting the EU for imposing a penalty on social media platform X for breaching its transparency obligations under the EU’s Digital Services Act, the bloc’s content moderation rule book. “They should just implement the law, which means they need to be tougher,” Eickhout told POLITICO on the sidelines of the event. He argued that the fine of €120 million is “nothing” for billionaire Elon Musk and that the EU executive should go further. The Commission needs to “make clear that we should be proud of our policies … we are the only ones fighting American Big Tech,” he said, adding that tech companies are “killing freedom of speech in Europe.” The Greens have in the past denounced Meta and X over their content moderation policies, arguing these platforms amplify “disinformation” and “extremism” and interfere in European electoral processes. Meta and X did not reply to a request for comment by the time of publication. Meta has “introduced changes to our content reporting options, appeals process and data access tools since the DSA came into force and are confident that these solutions match what is required under the law in the EU,” a Meta spokesperson said at the end of October. Tech mogul Musk said his response to the penalty would target the EU officials who imposed it. U.S. Secretary of State Marco Rubio said the fine is “an attack on all American tech platforms and the American people by foreign governments,” and accused the move of “censorship.” “It’s not good when our former allies in Washington are now working hand in glove with Big Tech,” blasted European Green Party chair Ciarán Cuffe at the opening of the congress in Lisbon. Eickhout, whose party GreenLeft-Labor alliance is in negotiations to enter government in the Netherlands, said “we should pick on this battle and stand strong.” The Commission’s decision to fine X under the EU’s Digital Services Act is over transparency concerns. The Commission said the design of X’s blue checkmark is “deceptive,” after it was changed from user verification into a paid feature. The EU’s executive also said X’s advertising library lacks transparency and that it fails to provide access to public data for researchers as required by the law.  Eickhout lamented that European governments are slow in condemning the U.S. moves against the EU, and argued that with its recent national security strategy, the Americans have made clear their objective is to divide Europe from within by fueling far-right parties. “Some of the leaders like [French President Emmanuel] Macron are still desperately trying to say that that the United States are our ally,” Eickhout said. “I want to see urgency on how Europe is going to take its own path and not rely on the U.S. anymore, because it’s clear we cannot.”

BRUSSELS — The European Commission plans to wrap several of its investigations into Big Tech under the bloc’s content moderation law soon, tech chief Henna Virkkunen said Friday. That’s likely to enrage officials in Washington, several of whom said that they consider U.S. companies are being unfairly targeted by Brussels. The European Commission on Friday slapped a €120 million fine on Elon Musk’s X for not complying with transparency obligations under the EU’s Digital Services Act (DSA). It was the first-ever fine under the law that makes platforms liable for content moderation. “In the coming months, there will be more decisions coming,” Virkkunen told reporters after a meeting of EU digital affairs ministers in Brussels. “With most of the investigations, we already have published the preliminary findings, and after that, the next step is to encourage those online platforms to comply with our rules,” she said. If they don’t, a non-compliance decision — which could include a fine — would follow. While European politicians expressed cautious praise for the X decision on Friday, the Trump administration reacted with fury. “The European Commission’s $140 million fine isn’t just an attack on @X, it’s an attack on all American tech platforms and the American people by foreign governments,” Secretary of State Marco Rubio posted on X. “The days of censoring Americans online are over.” When asked by POLITICO to respond to the accusation that the EU is unfairly targeting American companies, Virkkunen said that of 10 platforms under formal investigation under the DSA, only three are U.S. companies. French President Emmanuel Macron said last week he felt Brussels was “afraid” of tackling U.S. Big Tech and that an “American offensive” had cowed the European Commission. In a press briefing earlier in the day, Virkkunen said that in the case of X, it had taken too long to go from preliminary findings to a final decision. “I agree that it took a very long time, especially from the preliminary findings, because the preliminary findings on this topics [were] already published in summer 2024,” she said.

French President Emmanuel Macron said Brussels is too slow in its handling of probes into American Big Tech companies due to U.S. pressure over the EU’s digital laws. “We have cases that have been before the Commission for two years. It’s much too slow,” Macron said Friday in reference to the EU’s content moderation rule book, the Digital Services Act (DSA). The debate around the matter is “not gaining momentum,” Macron told a local town hall event in the Vosges region, and “many in the Commission and member states are afraid to pursue it because there’s an American offensive against the application of directives on digital services and markets.” Macron promised to push for action at the EU level, adding: “We have a geopolitical battle to fight. This is not Russian interference, it is clearly American because these platforms do not want us to bother them.” Macron’s remarks follow a week that saw renewed pressure from the U.S. over the EU’s two tech rulebooks, the DSA and the Digital Markets Act. U.S. Commerce Secretary Howard Lutnick urged EU ministers on Monday to “reconsider” the rulebooks in exchange for lower U.S. steel and aluminium tariffs, in line with the American playbook of treating the EU’s tech rules as a bargaining chip in a transatlantic trade war. The rules have been a target for the U.S. administration and tech executives ever since President Donald Trump returned to office. Both the EU’s tech chief, Henna Virkkunen, and her competition colleague, Teresa Ribera, came out against the U.S. pressure this week, with the latter accusing Washington of “blackmail.” The European Commission is also under pressure from European Parliament lawmakers, with the Socialists and Democrats group moving to set up an inquiry committee to investigate the EU’s enforcement of digital rules. Responding to Macron’s remarks, European Commission spokesperson Thomas Regnier said: “We have been very clear since the very beginning: We are fully behind our digital legislation and are enforcing it.” He argued that “some cases take a bit more time than others, because the DSA investigations are broad.” “The Commission services are building solid cases, because we have to win them in court,” he said. The EU has investigations open under the DSA into X, Meta, AliExpress, Temu and TikTok. The probes could lead to fines of 6 percent of a company’s annual global turnover, but none have been levied so far.

BRUSSELS — Platforms including Meta and TikTok will be held liable for financial fraud for the first time under new rules agreed by EU lawmakers in the early hours of Thursday. The Parliament and Council agreed on the package of rules after eight hours of negotiations to strengthen safeguards against payment fraud. The deal adds another layer of EU regulatory risk for U.S. tech giants, which have lobbied the White House to confront Brussels’ anti-monopoly and content moderation rules. “This is a big win. A big, big step forward. We are coming from a reality where platforms are not liable under any law,” Morten Løkkegaard, the Danish Renew MEP who shepherded part of the package through Parliament, told POLITICO. “It is a historical moment.” Social media has become rife with financial scams, and MEPs pushed hard to hold both Big Tech and banks liable during legislative negotiations. EU governments, meanwhile, believed banks should be held responsible if their safeguards aren’t strong enough. As a compromise, lawmakers agreed that banks should reimburse victims if a scammer, impersonating the bank, swindles them out of their money, or if payments are processed without consent. But social media companies will have to compensate banks if it’s clear that they failed to remove an online scam that had been reported. Some MEPs had called for more amid concerns that EU consumer safeguards on social platforms have proven insufficient. “Especially, as AI and social-engineering fuel an unprecedented rise in scams,” said Lithuanian Greens lawmaker Virginijus Sinkevičius. The new rules build on the EU’s Digital Services Act and the Digital Markets Act, which respectively limit the spread of illegal content and prevent large online platforms, such as Google, Amazon and Meta, from overextending their online empires. Breaching the DSA and DMA can come with huge fines, triggering pushback from the tech sector and U.S. President Donald Trump, who has accused the EU of discriminating against American companies. U.S. Secretary of Commerce Howard Lutnick has threatened to keep 50 percent tariffs on European exports of steel and aluminum unless the EU loosens its digital rules. Thursday’s deal triggered immediate criticism from the tech industry. “This convoluted framework undermines simplification efforts and conflicts with the Digital Services Act’s ban on general monitoring — ignoring multiple studies warning it will be counterproductive,” said CCIA Europe Policy Manager Leonardo Veneziani, whose trade body represents Amazon, Google, Meta and Apple. “Instead of protecting consumers, today’s outcome sets a dangerous precedent and shifts responsibility away from those best placed to prevent fraud,” he said.

LONDON — The wait is finally over. After weeks of briefings, speculation, and U-turns, Chancellor Rachel Reeves has set out her final tax and spending plans for the year ahead. As expected, there is plenty for policy wonks to chew over. To make your lives easier, we’ve digested the headline budget announcements on energy, financial services, tech, and trade, and dug deep into the documents for things you might have missed.  ENERGY  The government really wants to bring down bills: Rachel Reeves promised it would be a cost-of-living budget, and surprised no one with a big pledge on families’ sky-high energy bills. She unveiled reforms which, the Treasury claims, will cut bills by £150 a year — by scrapping one green scheme currently paid for through bills (the Energy Company Obligation) and moving most of another into general taxation (the Renewables Obligation). The problem is, the changes will kick in next year at the same time bills are set to rise anyway. So will voters actually notice? The North Sea hasn’t escaped its taxes: Fossil fuel lobbyists were desperate to see a cut in the so-called Windfall Tax, which, oil and gas firms say, limits investment and jobs in the North Sea. But Rachel Reeves ultimately decided to keep the tax in place until 2030 (even if North Sea firms did get a sop through rules announced today, which will allow them to explore for new oil and gas in areas linked to existing, licensed sites.) Fossil fuel lobbyists, Offshore Energies UK, were very unimpressed. “The government was warned of the dangers of inaction. They must now own the consequences and reconsider,” it said. FINANCIAL SERVICES Pension tax changes won’t arrive for some time: The widely expected cut in tax breaks for pension salary sacrifice is set to go ahead, but it will be implemented far later than thought. The thresholds for exemption from national insurance taxes on salary sacrifice contributions will be lowered from £60,000 to £2,000 in April 2029, likely to improve forecasts for deficit cuts in the later years of the OBR’s forecasts. The OBR has a markets warning: The U.K.’s fiscal watchdog warned that the price-to-earnings ratio among U.S. equities is reminiscent of the dotcom bubble and post-pandemic rally in 2021, which were both followed by significant market crashes. The OBR estimated a global stock market collapse could cause a £121 billion hike in U.K. government debt by 2030 and slash U.K. growth by 0.6 percent in 2027-28. Even if the U.K. managed to stay isolated from the equity collapse, the OBR reckons the government would still incur £61 billion in Public Sector Net Financial Liabilities. Banks back British investments: British banks and investment houses have signed an agreement with the Treasury to create “invest in Britain” hubs to boost retail investment in U.K. stocks, a plan revealed by POLITICO last week. Reeves also finally tabled a cut to the tax-free cash ISA allowance: £12,000 from spring 2027 (the amount and timings also revealed by POLITICO last week), down from £20,000, with £8,000 slated for investments only. Over-65s will keep the full tax-free subscription amount. Also hidden in the documents was an upcoming consultation to replace the lifetime ISA with a “new, simpler ISA product to support first-time buyers to buy a home.” No bank tax: Banks managed to dodge a hike in their taxes this time, despite calls from the IPPR for a windfall-style tax that could have raised £8 billion. The suggestions (which also came from inside the Labour Party) were met with an intense lobbying effort from the banks, both publicly and privately. By the eve of the budget, City figures told POLITICO they were confident taxes wouldn’t be raised, citing the high rate of tax they already pay and Reeves’ commitment to pushing for growth through the financial services industry. TECH ‘Start, scale, stay’ is the new mantra:  Startup founders and investors were in panic mode ahead of the budget over rumored plans for an “exit tax” on wealthy individuals moving abroad, but instead were handed several wins on Wednesday, with Reeves saying her aim was to “make Britain the best place in the world to start up, to scale up and to stay.” She announced an increase in limits for the Enterprise Manage Scheme, which incentivizes granting employees share options, and an increase to Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) thresholds to facilitate investment in growing startups. A further call for evidence will also consider “how our tax system can better back entrepreneurs,” Reeves announced. The government will also consider banning non-compete clauses — another long-standing request from startups. Big Tech will still have to cough up: A long-standing commitment to review a Digital Services Tax on tech giants was quietly published alongside the budget, confirming it will remain in place despite pressure from the Trump administration. The government will ‘Buy British’ on AI: Most of the government’s AI announcements came ahead of the budget — including plans for two new “AI Growth Zones” in Wales, an expansion of publicly owned compute infrastructure — meaning the only new announcements on the day were a relatively minor “digital adoption package” and a commitment to overhaul procurement processes to benefit innovative tech firms. But the real point of interest on AI came in the OBR’s productivity forecasts, which said that despite the furor over AI, the technology’s impacts on productivity would be smaller than previous waves of technology, providing just a 0.2 percentage point boost by 2030. The government insists digital ID will ultimately lead to cost savings. | Andrea Domeniconi/Getty Images OBR delivers a blow to digital ID: The OBR threw up another curveball, estimating the cost of the government’s digital ID scheme at a whopping £1.8 billion over the next three years and calling out the government for making “no explicit provision” for the expense. The government insists digital ID will ultimately lead to cost savings — but “no specific savings have yet been identified,” the OBR added. TRADE  Shein and Temu face new fees: In a move targeted at online retailers like Shein and Temu, the government launched a consultation on scrapping the de minimis customs loophole, which exempts shipments worth less than £135 from import duties. These changes will take effect from March 2029 “at the latest,” according to a consultation document. Businesses are being consulted on how the tariff should be applied, what data to collect, whether to apply an additional administration fee, as well as potential changes to VAT collection. Reeves said the plans would “support a level-playing field in retail” by stopping online firms from “undercutting our High Street businesses.”  Northern Irish traders get extra support: Also confirmed in the budget is £16.6 million over three years to create a “one-stop shop” support service to help firms in Northern Ireland navigate post-Brexit trading rules. The government said the funding would “unlock opportunities” for trading across the U.K. internal market and encourage Northern Ireland to take advantage of access to EU markets.  There’s a big question mark over drug spending: Conspicuously absent was any mention of NHS drug spending, despite U.K. proposals to raise the cost-effectiveness threshold for new drugs by 25 percent as part of trade negotiations with the U.S., suggesting a deal has not yet been finalized. The lack of funding was noted as a potential risk to health spending in the Office for Budget Responsibility’s Economic and Fiscal Outlook, which was leaked ahead of the budget. 

BRUSSELS — The European Commission may act as sole enforcer of the EU’s Big Tech rules, but a settlement reached between Google and an Italian regulator demonstrates there is still plenty of room for its national counterparts to drive the agenda. The Italian Competition Authority disclosed on Friday that it had reached a settlement with the U.S. search giant to modify the design of its terms and conditions for users to consent to sharing their data. The investigation, which accused the tech giant of using “misleading and aggressive” commercial practices to get users to link services like Maps and Search, thus violating Italian consumer protection rules, struck at conduct that is also covered by the EU Digital Markets Act (DMA). While the DMA was designed to centralize digital enforcement in Brussels, it has not boxed out national regulators from pursuing Big Tech cases.  Responding on Monday, the Commission welcomed Google’s Italian settlement and said the changes it foresees would be rolled out EU-wide. “Google’s commitments are a good example of how the work of national authorities on consumer protection law complements the Commission’s enforcement of the DMA to achieve better results,” a Commission spokesperson said. “Google will change its consent screens to provide clearer, more accurate information — both about how Google combines and cross-uses personal data and what the implications of consent are for users.” The EU’s digital rules are a major concern for the Donald Trump administration, and U.S. Commerce Secretary Howard Lutnick raised the matter on a visit to Brussels on Monday. Lutnick called for the bloc to “take the foot off this regulatory framework,” and held out the prospect of cooperation in other areas, like steel, in return. Washington’s main gripe is that the DMA, by design, targets the largest technology platform companies — and these are chiefly American. In addition, Google was recently fined nearly €3 billion in an antitrust case in which the EU’s trust busters found it had unfairly squeezed digital advertising customers. The search giant last week proposed a series of tweaks in response to the landmark antitrust decision, but snubbed calls to break itself up. CONTINENTAL PATCHWORK In the Commission’s ongoing review of the DMA, some tech sector stakeholders have raised concerns that this could recreate a patchwork of national rules that the regulation is supposed to harmonize. Google had argued to the Italian regulator that this issue should be handled by the Commission given its status as a gatekeeper, an argument that the Rome-based agency rejected citing jurisprudence that allows Italian consumer law to apply. The EU’s digital rules are a major concern for the Donald Trump administration, and U.S. Commerce Secretary Howard Lutnick raised the matter on a visit to Brussels. | Pool photo by Aaron Schwartz/EPA In its decision, the Italian Competition and Consumer Protection Authority said it had cooperated with the Commission on the case and engaged trilaterally on the remedies. The Italian regulator opened the case in 2024, shortly after the DMA came into effect, accusing Google of using misleading and aggressive commercial practices to get users to link services like Maps and Search. Google has now agreed to redesign the choice screen and prompt all of its Italian users to choose their data preferences once again. The broader design changes however will impact all European users. “Following coordinated discussions with the [European Commission] and [the Italian Competition Authority], we are making simple updates to our existing information screens we show users, to decide if they want to link our services,” said a spokesperson for Google. While the Commission has, to date, not specified its view on Google’s compliance with the DMA on data consent, the company’s solution has garnered criticism from consumer groups like BEUC for misleading users. In that vacuum, the Italians acted. Nor was it the first national agency to do so. Before the DMA came into effect, the German competition authority had intervened in Google’s data use policy on the basis of its national digital competition rules, leading to EU-wide remedies that saw DMA-like rules extended beyond designated services like Search to others like Gmail.

BRUSSELS — You can even put an exact date on the day when Brussels finally gave up on its decade-long dream of seeking to be the predominant global tech regulator that would rein in American tech titans like Google and Apple.  It came last Wednesday — Nov. 19 — when the European Commission made an outright retreat on its data and privacy rules and hit pause on its AI regulation, all part of an attempt to make European industries more competitive in the global showdown with the United States and China.   It sounded the death knell for what has long been described as the “Brussels Effect” — the idea that the EU would be a trailblazer on tech legislation and set the world’s standards for privacy and AI.  Critics say Washington is now setting the deregulatory trajectory, while U.S. President Donald Trump is battering down Europe’s ambitions by threatening to roll out tariffs against countries that he accuses of attacking “our incredible American Tech Companies.” “I don’t hear anybody in Brussels saying ‘We’re a super regulator’ anymore,” said Marietje Schaake, who shaped Europe’s tech rulebooks as a former European Parliament member and special adviser to the European Commission. The big pivot away from rule-setting came in a “digital omnibus” proposal on Wednesday — a core part of Commission President Ursula von der Leyen’s “simplification” program to cut red tape to make Europe more competitive. The digital omnibus was one of the “main discussion points” at a meeting between the EU’s tech chief Henna Virkkunen and U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. | Nicolas Tucat/AFP via Getty Images “Whether you call it ‘simplification’ or ‘deregulation,’ you are certainly moving away from the high watermark era of regulation,” said Anu Bradford, a professor at Columbia University who coined the term “Brussels Effect” in 2012. The deregulation drive followed a year in which the Trump administration pressured the EU to roll back enforcement of its tech rulebooks, which Big Tech giants and Trump himself deem “taxes” targeted at U.S. companies. The digital omnibus was one of the “main discussion points” at a meeting between the EU’s tech chief Henna Virkkunen, U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer on Monday. “We adopted a major package that would have an impact not only on EU companies, but also on U.S. companies, so this is the appropriate moment … to explain what we’re doing on our side,” European Commission spokesperson Thomas Regnier told reporters on Monday when asked why Virkkunen had discussed the topic with her U.S. counterparts. Lutnick, however, told Bloomberg that Washington was seeking more than just an explanation of EU laws — it wanted changes to its tech rulebooks as well. U.S. giants like Google and Meta have led a full-frontal lobbying push to replace heavy-handed EU enforcement with lighter-touch rules. Behind the push to break the shackles for tech firms is a fear of missing out on the promised economic boom linked to AI technologies. The bloc has traded its role as global tech cop for a ticket to the AI race.  GLOBAL FIRST Brussels showed its ambition to lead the world in regulating the online space throughout the 2010s. In 2016 it adopted the General Data Protection Regulation. Since then, the law has been copied in new legislation across more than 100 countries, said Joe Jones, director of research and insights at the International Association of Privacy Professionals.  When the GDPR came into force, international companies like Microsoft, Google and Facebook acknowledged it spurred them to apply EU privacy standards globally.  It served as a quintessential case of the Brussels Effect: When setting the bar in Brussels, multinational firms would roll out standards across their businesses far beyond the EU’s borders. Other governments, too, copied some of Brussels’ early attempts at setting the rules. After the GDPR, the EU adopted other laws that had the ambition of reining in Big Tech, either by pressing platforms to police for illegal content through its Digital Services Act or by blocking them from using their dominance to favor own services through the Digital Markets Act. Right after the EU adopted its risk-focused AI rulebook, Trump took office and scrapped AI safety rules embraced by his predecessor Joe Biden.  | Chip Somodevilla/Getty Images The EU’s latest blockbuster tech rulebook, the Artificial Intelligence Act, was Brussels’ latest attempt at pioneering legislation, as it sought to address the risks posed by the fledgling technology. “There was more confidence in the EU’s regulation, partially because the EU seemed confident. Right now, when the EU seems to be retreating, any government around is also asking the same question,” Bradford said. Right after the EU adopted its risk-focused AI rulebook, Trump took office and scrapped AI safety rules embraced by his predecessor Joe Biden.   The changing of the guard in Washington came right as Brussels was waking up to the need to be competitive in a global technology race. Former Italian Prime Minister Mario Draghi presented the EU’s competitiveness report in 2024, just weeks before Trump won a second term. “I think the Brussels effect is still alive and well. It just has a bit of the Draghi effect, in that it has a bit of this geopolitical innovation, pro-growth effect in it,” said IAPP’s Jones.  According to German politician Jan Philipp Albrecht, a former European Parliament member who was a chief architect of the GDPR, Europe has become blind to the benefits of its regulatory regime that set the gold standard. “Europeans have no self-secureness anymore … They don’t see the strength in their own market and in their own regulatory and innovative power,” Albrecht said.  WASHINGTON EFFECT Other critics of deregulation are taking a step further, claiming that Washington has hijacked the Brussels Effect — but just on its own terms.   “In an odd way, maybe the Trump administration has taken inspiration from the Brussels Effect, in the sense [that] they see what it means for this one regulating entity to be the one that sets global standards,” said Brian J. Chen, policy director at nonprofit research group Data & Society. It’s just, “they want to be the ones setting those standards,” Chen said. The Trump administration pressured Brussels to tone down its tech regulation during heated trade talks this summer, POLITICO previously reported. That the EU followed through with scaling back its tech laws just as the U.S. is pressing the EU is bad optics, said Schaake, the former lawmaker. “The timing of the whole simplification [package] is very bad,” she said.  She argued that it’s essential to deal with the unnecessary burden on companies, but issuing the digital omnibus after the U.S. pressure “looks like a response to that criticism.” Commission spokesperson Thomas Regnier dismissed the idea that the EU was acting on U.S. pressure. “On the digital omnibus, absolutely no third country had an influence on our sovereign simplification agenda. Because this omnibus is about Europe: less administrative burden, less overlaps, less costs,” Regnier said in a comment on Friday. “We have always been clear: Europe has its sovereign right to legislate,” Regnier added. “Nothing in the omnibus is watering down our digital legislation and we will keep enforcing it, firmly but always fairly.” This article has been updated to include new developments.

In a luxury Saudi hotel some 3,000 miles away from her economic woes, Britain’s Chancellor Rachel Reeves delivered a plucky pitch to some of the wealthiest people on the planet. “I believe that countries are successful when they are open and trading — I think that’s good for productivity because competition spurs productivity, growth,” she told business leaders at the Fortune Global Forum last month. “And in a small and open economy like Britain’s … we want our businesses to be able to access global markets.” With this in mind, the chancellor said, Britain was striking trade deals with the EU, the U.S., as well as fast-growing economies like India, as she teased “big opportunities” from an upcoming free trade agreement with Gulf countries. With a difficult budget looming, the chancellor has increasingly turned her gaze overseas in her elusive search for economic growth. And with the Office for Budget Responsibility expected to downgrade the U.K.’s productivity outlook before the budget, Reeves is urging the fiscal watchdog to positively “score” new trade deals according to how much growth they might deliver. But her efforts may be in vain. Far from being the magic bullet that will reinvigorate the economy, the benefits of trade deals may take years to materialize — and some government claims appear to be overstated, experts have told POLITICO. EU ‘RESET’ HOPES By the government’s estimation, its plans to “reset” its relationship with the European Union will add nearly £9 billion to the U.K. economy by 2040, equivalent to a GDP boost of 0.3 percent. Key elements include deals on agrifood, energy trading, and a youth mobility scheme.  Separate analysis by John Springford, an associate fellow at the Centre for European Reform in London, is more optimistic, predicting a GDP boost of between 0.3 and 0.7 percent over ten years as a result of the agreement. The biggest uplifts, he claims, would come from a youth mobility deal.  But negotiations on key elements of the deal have only just begun, and Springford admits details are still “a bit sketchy.” As a result, he says, it would be difficult for the OBR to accept Reeves’ ask to score these deals, which would also take a long time to play out. Even if the government’s estimates are met, he added, the deal will do little to reverse the overall damage caused by Brexit, which the OBR estimates will reduce the U.K.’s long-run productivity by 4 percent. “The damage caused by Brexit can never be significantly repaired without getting rid of one or all of the government’s ‘red lines’,” he continued, in reference to Labour’s refusal to rejoin the single market or customs union.  In recent months the chancellor has talked about the impact of Brexit on the economy, but has suggested this impact can be offset by the reset deal, as well as by trade deals with non-EU countries. “There is no doubting that the impact of Brexit is severe and long lasting,” she said in an interview with Sky News in October, “and that is why we are trying to do trade deals around the world, with the U.S., India, but most importantly with the EU, so that our exporters here in Britain have a chance to sell things made here all around the world.” Guests at the Fortune Global Forum 2025 Gala Dinner. | Cedric Ribeiro/Getty Images for Fortune Media But Ahmet Kaya, principal economist at the National Institute of Economic and Social Research, said the EU deal was “more symbolic than transformative.”  “It slightly eases checks on agri-food products, which should help certain sectors, but the macroeconomic effect is minimal considering that the government’s impact estimate is just £9 billion — which is cumulative gain over time — relative to the size of the £3.6 trillion economy.” INDIA FREE TRADE AGREEMENT Reeves will also be pinning her growth hopes on the U.K.’s recently completed free trade agreement with India, which the government predicts will boost U.K. GDP by 0.13 percent, worth £4.8 billion a year.  The deal will ultimately see India remove tariffs on up to 90 percent of U.K. exports and cut India’s average effective tariffs on U.K. goods from roughly 15 percent to 3 percent, with significant benefits for Britain’s automotive and Scotch whisky exports. But Sophie Hale, principal economist at the Resolution Foundation, said it could take 10 to 15 years for the full effects of the deal to be felt, partly because many tariff reductions will be introduced gradually and are subject to quotas. “Given the OBR is looking over a five-year window, we really aren’t going to expect a big impact,” she said. “Even if it was spread evenly, you’re maybe getting less than half of that by the end of the forecast, because it has to actually be implemented.” The deal is “definitely worth having,” Hale added. “But in terms of … OBR productivity growth forecasts or shifting the dial on U.K. growth, it’s pretty small and a lot of those impacts are going to be delayed.”  TARIFF TERRORS Reeves will also be hoping that the U.K.’s Economic Prosperity Deal with the U.S. — announced with much fanfare in May — will have gone some way in cushioning the impact of President Donald Trump’s punitive tariff regime. The deal saw the U.K. hit with 10 percent baseline tariffs on most goods, with reduced duties for automotives, steel and aluminum, and increased market access for agricultural exports.  While this gave Britain a comparative advantage over most other countries, it has still left the U.K. in a weaker trade position with the U.S. than a year ago. According to NIESR’s latest forecast, U.S. tariffs have reduced U.K. growth by around 0.1 percentage points this year and 0.2 percentage points next year.  “That’s a smaller drag than expected in March, reflecting the more moderate global spill-overs from tariffs, but the overall impact remains negative,” said Kaya. But even this remains uncertain. Like the EU deal agreed earlier this year, much of the EPD remains under negotiation, including pharmaceutical tariffs, which makes it difficult to “score” in terms of its economic impact. MAKING TRADE DEALS WORK Even when trade deals are fully agreed and implemented, their economic impacts are not guaranteed, and it is sometimes an uphill struggle to get businesses to actually make use of them.  “Trade deals have the potential to support economic growth, but their impact does not appear overnight and needs time and support to make it happen,” noted George Riddell, managing director of the Goyder trade consultancy.  “Businesses need to make connections with local customers, understand local regulatory requirements and establish partnerships to help with relevant legal, tax and customs procedures.” In the government’s trade strategy, published over the summer, the Department for Business and Trade committed to overhauling how it supports U.K. businesses and provides export advice through a “one-stop-shop.”  “While the new website is a substantial improvement on what was there before, more needs to be done to get businesses using it,” said Riddell.  Britain’s Chancellor of the Exchequer Rachel Reeves will be hoping that the U.K.’s Economic Prosperity Deal with the U.S. will have gone some way in cushioning the impact of President Donald Trump’s punitive tariff regime. | Pool photo by Jordan Pettitt/AFP via Getty Images Trade Minister Chris Bryant acknowledged this issue in a recent speech, telling businesses the estimates of the economic impact of trade deals could only be realized “if businesses are ambitious enough to exploit these opportunities.”  “It’s not just about signing free trade agreements,” he said at a pitching event for exporters earlier this month. “We can sign FTAs, we can do all that negotiating … But it’s exploiting those FTAs once they’ve been signed that is really important and will actually drive growth.” Looking back at the U.K.’s first post-Brexit trade deals, David Henig, director of the UK Trade Policy Project at the European Centre for International Political Economy think tank, says there is little sign of material impact. “There is currently no evidence that the new trade deals with Australia and New Zealand have affected the U.K. economy in any meaningful sense,” he said, adding there was “nothing that indicates any permanent increase in trade so far.” ‘BEATING THE FORECASTS’ As the budget approaches, Reeves’ growth ambitions look increasingly uncertain. The OBR has downgraded the U.K.’s productivity outlook, potentially increasing government borrowing by £14 billion and £20 billion. Just last week, figures from the Office for National Statistics show that U.K. GDP fell unexpectedly by 0.1 percent in September. Publicly, at least, the chancellor has remained upbeat. “My job as chancellor is to try and beat those forecasts,” she said last month, “and what we’re doing with those trade deals with India, the U.S. and the EU, the investments that we’ve secured, including from big tech companies in the U.K., shows that we have a huge amount to offer as a place to grow a business, to start and scale a business.  “We’ll continue to secure those investments in all parts of Britain, to create those good jobs, paying wages and to boost our productivity, which means that we will start to see those numbers coming through in economic growth and prosperity for working people.” James Fitzgerald contributed to this report.