By Eric Vandenbroeck and co-workers

Technology companies such as Alphabet, Meta, and OpenAI need to wake up to an unpleasant reality. By getting close to U.S. President Donald Trump, they risk losing access to one of their biggest markets: Europe.

Just a decade ago, these companies believed that information technology would limit the power of governments and liberalize the world. But then, as globalization withered and the U.S. confrontation with China took hold, they tried to take advantage of growing geopolitical divides, enlisting on Washington’s side in the new technological cold war. Now, the new Trump administration appears less enthusiastic about fighting China than it is about subjugating U.S. allies in the European Union and elsewhere. U.S. tech companies extract billions of dollars in profits from European markets. Although many of these tech companies would love to take the EU regulatory state down a peg, they don’t want to get caught in the crossfire of an all-out EU-U.S. tech war.

Unfortunately for Big Tech, such a war may be about to erupt. The Trump administration’s evident contempt for Europe may not only endanger the business interests of European companies. It could also spell the end of today’s open Internet, as Europeans look to build alternative platforms to those of the giant U.S. tech firms.

Silicon Valley’s efforts to cater to the Trump administration threaten to undermine Big Tech’s business model across much of the world. As tech executives have embraced the new U.S. government, they have increasingly embroiled themselves in the brewing conflict between European regulators in Brussels and an executive in Washington acting with striking unilateralism. As a result, Europeans are starting to take a second look at their reliance on U.S. cloud, platform, and satellite providers. They increasingly see such dependency not just as a competitiveness issue but also as a critical strategic vulnerability that could be exploited against them. Most worrying for U.S. tech companies is that even if European politicians are reluctant to act, European judges, regulators, and activists may act in their stead and push to sever data flows between the United States and Europe.

This is not the first time that a rift has opened between the United States and Europe on technology. A decade ago, the National Security Agency contractor Edward Snowden revealed that the United States had been spying on European leaders, revelations that provoked EU threats to limit flows of personal data to the United States. Brad Smith, Microsoft’s president, explained in a 2019 book that the uproar around Snowden’s disclosures had created a lasting “chasm between governments and the tech sector.” When the European Court of Justice ruled in 2015 against an arrangement that allowed data on EU citizens to be sent to the United States, Eric Schmidt, then the executive chairman of Alphabet, lamented that the EU might break the global Internet, “one of the greatest achievements of humanity.”

The global Internet will likely continue to exist in the form of shared technical infrastructure. But if U.S. companies persist in identifying with a U.S. administration that is hostile to Europe, Europe will likely want its own companies and platforms to build technological fortifications against its former ally and protector. Chinese firms will try to expand in Europe, too, although they may also face greater public skepticism. Either way, the result will be lower profits, weakened American innovation, and a more isolated and insecure United States.

 

Jello on the Wall

Not too long ago, things weren’t so complicated. Silicon Valley’s business model seemed to go hand in hand with Washington’s geopolitical consensus. The U.S. government and U.S. tech companies agreed that the future lay in building a world that was safe for liberal politics and economics. The spread of the Internet and social media would inexorably undermine the power of autocratic governments. President Bill Clinton famously told China in 2000 that trying to control the Internet was like trying to nail Jello to the wall, and President George W. Bush funded the creation and spread of “liberation technology” that might nibble away at the foundations of dictatorship.

When social media seemed to amplify demonstrations in Iran in 2009, the Goldman Sachs executive Jared Cohen was working in President Barack Obama’s State Department. He asked Twitter to delay a technical downtime so that the platform would remain accessible to protesters. To be sure, the protests weren’t solely dependent on social media. Cohen would nevertheless go on to co-author a book with Schmidt, celebrating the power of technology to spread freedom and underpin shared prosperity.

Other technology companies supported this missionary zeal to remake the planet. In a notorious 2016 internal presentation, Andrew Bosworth, one of the “most trusted lieutenants” of Facebook founder Mark Zuckerberg, told Facebook staff that someone might perhaps die because of bullying on Facebook’s services or in a terrorist attack coordinated with Facebook’s tools. Nonetheless, as the journalists Ryan Mac, Charlie Warzel, and Alex Kantrowitz reported in BuzzFeed in 2018, Bosworth argued that Facebook would go on. Its mission to connect the world, including, eventually, China, was “de facto good,” even if a few people had to suffer along the way.

Certainly, people suffered. In the early 2010s, as the autocratic regime in Myanmar seemed to start opening up, technology evangelists such as Schmidt argued that the country should embrace Internet freedom on the principle that “the answer to bad speech is more speech.” Government officials and religious extremists in Myanmar discovered other possibilities. They used Facebook to propagandize against the Rohingya minority, helping fuel a widespread program of genocide in 2016. Facebook lacked the technical and local language capacities to see what was happening, let alone to do anything about it.

Connecting the world did not convert illiberal societies to liberalism. After Trump became president in 2016, many worried that the Internet would make previously liberal societies more illiberal, drenching the public with disinformation. Some of Trump’s critics used sketchy arguments and weak empirical evidence to accuse Facebook and other social media services of having allowed Russian propagandists to manipulate Americans into voting for a leader with authoritarian predilections. Social media services responded by introducing new anti-disinformation tools in the United States and other core markets while often skimping on such safeguards in poorer countries.

 

Lines in the Sand

Another important transformation occurred around this time. During the first Trump administration, most U.S. politicians became China hawks. They began to think of technology not as a means of liberating China from autocracy but rather as a way to hobble Beijing’s ambitions. When Google’s “Project Dragonfly”—a planned censorship-friendly search engine for the Chinese market—was leaked in 2018, Democrats and Republicans both condemned it, while the Chairman of the Joint Chiefs of Staff suggested that it was “inexplicable” that Google was still investing in an autocratic country whose values were so at odds with those of the United States. Google abandoned its ambitions to return to China.

Big Tech tacked with the political winds, embracing the new technological confrontation. Business leaders also began to seriously rethink the role of technology in a world of geopolitical rivalry. Schmidt, who had stepped down from his role leading Google’s parent company, chaired a highly influential bipartisan commission whose final report in 2021 argued that the United States needed to beat China at artificial intelligence. It could do so by both building up its technological strengths at home and denying China access to the specialized semiconductors best suited to train the most advanced AI models.

Others combined grand geopolitical theory with narrowly self-interested pleading. Zuckerberg, Meta’s CEO, told Congress in 2020 that if U.S. authorities acted to regulate Meta too harshly or break it up, the United States would actually be helping Chinese competitors such as TikTok undermine American technological dominance. A plethora of Silicon Valley companies that had previously held the U.S. national security state at a distance began to realize that it offered an enormous new business market and joined the likes of the data analytics firm Palantir in trying to sell their services and platforms to the government.

U.S. tech seemed well positioned for Trump’s return to power this year, even before the billionaire tech entrepreneur Elon Musk became Trump’s universal plenipotentiary. Before last year’s election, influential figures such as Zuckerberg and the Amazon founder Jeff Bezos began cozying up to the new regime; Zuckerberg courted Trump in private phone calls and, over the summer of 2024, removed restrictions that had been placed on Trump’s Facebook and Instagram accounts, while Bezos scrapped a planned endorsement by The Washington Post—the paper he owns—for Trump’s rival, Kamala Harris. After Trump won, both Zuckerberg and Bezos made pilgrimages to visit the president-elect at his residence, Mar-a-Lago. Trump relished their obeisance, commenting in December that “everyone wanted to be my friend.” For their part, many tech leaders were hopeful that Trump’s victory would be a boon for them; Trump seemed hawkish on China and willing to deregulate tech. Companies such as Facebook and Google had given up on expanding into the Chinese market anyway and hoped instead for a Trump administration that would gear up against their Chinese competitors and also push back against European regulations that Zuckerberg described in January as tantamount to a “censorship” regime.

 

Transatlantic Decoupling?

Big Tech’s leaders certainly didn’t want to make an enemy of Trump and had some reason to believe that he might help them. Tech CEOs and owners, including Bezos, Schmidt’s successor Sundar Pichai, and Zuckerberg, were willing to be displayed at Trump’s second inauguration like so many hunting trophies mounted on the wall.

Unfortunately, none of them are getting what they hoped for. To be sure, Trump’s second administration dislikes both domestic regulations and EU rules. However, at least for the moment, the government is continuing an antitrust case against Google that stemmed from investigations in Trump’s first term and is preparing actions against Amazon, Apple, and Meta. Trump seems happy to allow the Chinese-owned social media platform TikTok to keep operating in the United States, perhaps paving the way for a broader deal with China. And the Trump administration has evinced naked hostility to the EU, as evidenced by the private contempt for Europe expressed by Vice President JD Vance in leaked Signal messages. Rather than renegotiating the United States’ technology relationship with Europe on better terms, Trump’s demands that Europe back off from regulating U.S. tech companies (and that Denmark hand over Greenland) may lead Europeans to ask a question that U.S. tech firms don’t want them to ask: Is Europe’s reliance on American tech not just a competitiveness problem but a critical national security vulnerability?

 

At a Trade Fair in Hanover, Germany

Even during Trump’s first term, many Europeans found such questions unthinkable. The United States had supported Europe for decades. Although Europeans resented the dominance of American Big Tech, they had never seen an alternative or even necessarily wanted one. Casper Bowden, a British privacy advocate and former Microsoft employee, recounted how Europeans literally laughed at him when he warned about the surveillance risks of U.S. cloud computing in the years before the Snowden revelations.

Now, everyone in Europe can see the risks of relying on U.S. tech. The most obvious example is Starlink, the satellite communications firm owned by Musk. When the United States wanted to put pressure on Ukraine regarding possible negotiations to end the war with Russia, the White House suggested that it would deny access to Starlink, which provided the Ukrainian military with critical battlefield resources. Other European countries, now fearing that the United States might sell them out for temporary advantage, took note. They, too, depend on Starlink and other software, hardware, and technology for their daily operations. Europeans are moving away from Starlink as quickly as they can, with the European Commission investigating how it can support domestic alternatives. European car buyers, meanwhile, are turning away from Musk’s Tesla. Unfortunately for Silicon Valley, in the eyes of many Europeans, Amazon Web Services, Microsoft’s Azure business cloud services, and Facebook all risk becoming damaged brands.

It’s not just that technology might be turned off but that it might be used against European interests. Musk’s intervention on the side of far-right groups in Germany and the United Kingdom, attacking mainstream parties, has many European capitals on edge. Spanish Prime Minister Pedro Sánchez has taken the argument a step further, warning that “tech billionaires want to overthrow democracy.”

 

Break the Internet

There is an even greater threat to U.S. tech companies that has gotten far less attention. In sharp contrast to today’s United States, the European Union has a strong commitment to the rule of law, obliging politicians to comply with judge’s rulings. The Trump administration’s scofflaw tendencies and tech companies’ increasing hostility toward European values may lead to the collapse of the EU-U.S. arrangements on which tech companies such as Alphabet, Meta, and Microsoft depend.

Schmidt worried a decade ago that an EU-U.S. data dispute might collapse the Internet. Snowden showed how U.S. intelligence agencies had illicitly accessed European social media and Internet search data, breaching European privacy rules. That dispute was patched over by an ungainly agreement, negotiated between the European Commission and the U.S. government. The EU agreed to allow data flows, as long as the United States committed to protecting the privacy rights of EU citizens and offered some means of redress if they were violated by U.S. surveillance agencies. The keystone of the arrangement was a 2016 U.S. commitment that Washington’s surveillance agencies would respect European privacy rights through a process overseen by an obscure U.S. body, the Privacy and Civil Liberties Oversight Board.

This arrangement made nobody happy but provided legal and political cover for flows of data across the Atlantic. Meta continued to operate Facebook in Europe, and companies such as Amazon, Google, and Microsoft were able to host Europeans’ personal data on their cloud-computing platforms. For those companies, the stakes couldn’t be higher. Google alone makes over $100 billion in sales in Europe.

That arrangement is now on the verge of disintegrating, with the operations of U.S. tech companies in Europe in serious jeopardy. The Trump administration has not only fired most of the PCLOB’s members; it has also made clear in multiple ways that it will not comply with those legal rules that it finds inconvenient. The executive order that formed the PCLOB is under review—but even if it formally stays on the books, no one trusts the Trump administration to abide by it.

This potentially opens up the arrangement to challenge by activists such as Max Schrems, a canny Austrian privacy advocate, whose legal complaints led to the collapse of two previous arrangements. As Schrems’s organization has already warned, it may soon be illegal for any European entity to use U.S. cloud services to store personal data or for companies such as Meta to move data on European citizens back and forth between Europe and the United States. That would likely destroy Meta’s business model while making it difficult for companies such as Google and Microsoft to offer safe cloud services in Europe. Even if they segregate European data from U.S. data, they will be vulnerable to U.S. demands to share information held on their European servers or to stop offering robust encryption to European customers.

This time, there will be no plausible agreement between the two regimes. European judges and national privacy regulators will be extremely skeptical of promises from the Trump administration, and rightly so. European judges are not subject to the same political pressures as European politicians or European Commission officials. They see themselves as the guardians of national laws and a European constitutional order, which Trump and his officials want to undermine. Nor will judges be sympathetic to U.S. tech companies. A decade ago, these companies were able to disassociate themselves from the excesses of the U.S. government, deploring the U.S. surveillance programs that they sometimes had been unaware of. Now, their owners and CEOs have quite literally lined up to display their support for Trump, undermining possible excuses and claims of independence.

Google and Microsoft currently control two-thirds of the European market for cloud computing. However, European politicians, academics, think tanks, and entrepreneurs are already converging on the notion that Europe needs to build its own cloud resources to gain the strategic autonomy that it needs to wean itself from U.S. technology. A European court ruling against EU-U.S. data flows would dramatically accelerate these plans. So, too, could sweeping U.S. trade tariffs, which Europe might respond to by restricting U.S. technology services.

If that happens, Big Tech will have no one to blame but itself. Its response to geopolitical changes has been to build a closer relationship with the U.S. government, anticipating that it could continue to thrive in a world of U.S.-Chinese rivalry. Tech leaders willingly embraced Trump after his reelection, when they could have kept their distance. Big Tech companies may be about to discover that not only are they never going to have access to the Chinese market but they are increasingly persona non grata in European markets, too.

These fraying ties may mark the end of the dream of a global Internet, in which everyone shares the same services. Just as in China, European platforms may continue to use the Internet as the technological foundation for their services. But they will begin to construct their own alternative platforms on top, walled away from U.S. interference through Europe-only business models and strong encryption. This will not just lower U.S. profits; it will further damage the transatlantic security relationship. Schmidt’s prophecy may come true a decade later than he expected, and U.S. tech companies will have been complicit in bringing it to fruition.

 

 

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