This chapter is part of a report written in collaboration between the Center for American Progress and the Foundation for European Progressive Studies (FEPS).
Digital policy has become a new fault line in transatlantic relations. While American tech firms dominate the digital infrastructure that powers Europe, the European Union has emerged as the world’s leading regulator of digital markets. This chapter explores how the EU’s ambitious regulatory push—anchored in the Digital Services Act (DSA), Digital Markets Act (DMA), and forthcoming AI Act—is colliding with the Trump administration’s transactional approach to foreign policy, rising political pressure in Brussels, and increased lobbying by Big Tech. This chapter argues that amid these challenges, the European Union must defend its democratic right to regulate in the public interest and be prepared to act if the U.S. government or U.S. industry attempts to undermine those efforts.
Strategic context
The Trump administration has turned transatlantic relations upside-down—including in the realm of digital policy, where a lopsided relationship between the United States and the EU has existed for some time.
The United States is home to the world’s leading tech firms, which provide Europeans with platforms and infrastructure. As pointed out in a 2024 report by former European Central Bank President Mario Draghi, 80 percent of Europe’s digital infrastructure comes from outside the EU—primarily from American Big Tech providers—yet the European Union is a global leader in regulating tech. The European Parliament is the front-runner in data protection, having passed the General Data Protection Regulation in 2016 and, in 2022, having set groundbreaking rules for digital services in the DSA and digital markets in the DMA. In 2024, the parliament adopted the AI Act, which places guardrails on the uses of artificial intelligence.
Policy continuity and change
Almost immediately after the DSA was enacted, the large platforms it governs were put on notice: The European Commission launched investigations into the conduct of companies including X and Meta. Under the DMA, the commission also launched investigations into the conduct of Google (Alphabet) and Apple. While these proceedings always take time, European regulators in Brussels worry that pressure from powerful tech companies—backed by the American government—could delay enforcement of the DSA and the DMA or water down the final outcomes of the investigations. The question looming over the process is whether the European Commission will dare to impose fines of up to 1 percent of global turnover on firms closely aligned with the Trump administration. Even worse, the EU’s well-considered rules and regulations meant to protect citizens and businesses could end up on the bargaining table in order to avoid a trade war.
Diverging interests and approaches between the United States and the European Union
In the Trump administration’s transactional approach to foreign policy, the European Union’s digital rules and regulations have been reframed as non-trade market barriers to American companies and are being used as justification for retaliation in the form of tariffs on EU products. In addition, U.S. Vice President JD Vance endeavored to discredit the European rules fighting disinformation during his now-infamous February 2025 speech at the Munich Security Conference. Such tactics put pressure on the European Commission at the very moment it attempts to enforce the EU’s new digital rules.
Also adding pressure is the new political reality in Brussels following last year’s European parliamentary election. While the extreme right did not see a landslide victory, the position of the center-right European People’s Party was strengthened. This has emboldened European Commission President Ursula von der Leyen to put forward her version of a competitiveness agenda for the EU. Aimed at cutting red tape for business, her initial omnibus proposal targets hard-fought policy compromises in the European Green Deal and the domain of corporate social responsibility by proposing to overturn policies that were only recently adopted and are not yet fully in force at the member-state level.
In addition, as announced by Executive Vice President of the European Commission for Technological Sovereignty Henna Virkkunen, a digital omnibus is scheduled for later this year to reevaluate the DSA, the DMA, and other digital laws. The review may expose legal uncertainties surrounding the laws and open the door to extensive lobbying and potential legal challenges from Big Tech against the commission’s conclusions on both current and future infringement procedures. The EU’s rules-based approach to digital regulation is at risk of being curtailed before it has been fully implemented and before its benefits have been realized by both companies and citizens alike.
All of this stands in stark contrast to what European citizens expect from their representatives, including action on protecting minors online and mitigating addictive design. In a recent Eurobarometer poll, 92 percent of respondents reported worrying about their children online. Furthermore, social media has clear adverse mental health effects, and research has found that the use of these applications actively hinders children’s development.
These concerns have led EU progressives to push the European Commission to go further in its regulatory drive. Yet a draft of the recently announced Digital Fairness Act, a piece of legislation that would bolster consumer safeguards in the digital sphere, is not expected until 2026, suggesting that the commission is not acting with the appropriate urgency to tackle online safety.
Advancing shared agendas
It is still unclear how this new chapter in EU digital policymaking—targeting the core of the Big Tech business model—will be perceived and received on the other side of the Atlantic. When the EU was drafting the DSA and the DMA, U.S. tech firms spent millions of euros lobbying for their own interests. If supported by the Trump administration, Big Tech might resort to other measures such as threatening to disrupt trade and security cooperation to extort a more lenient approach from the European Commission and the European Parliament.
This pressure must be resisted. The European Union has the democratic, sovereign right to create its own rules for the online world. Its values and the health of its citizens and electoral processes are not up for bargaining.
If forced into a standoff with the Trump administration on this topic, the EU should be ready to respond with reciprocal economic measures. This could involve launching its own investigations into U.S. companies under EU competition law, delaying approvals for transatlantic data transfers, or imposing retaliatory trade measures. Only by taking such actions would the EU be able to get through the turbulent period ahead. EU policymakers should also be willing to put new demands on the table, such as taxing the windfall profits of Big Tech companies whose platforms are generating significant profit in the EU even though they do not pay any European taxes. Policymakers could reconsider the 2018 proposal for a European digital services tax to provide a targeted response to any tariff while ensuring that consumers’ wallets are not affected.
EU digital policy strives to address real concerns regarding competition, data protection, addiction, disinformation, and the protection of minors. These issues affect not only European citizens and businesses, but American citizens and businesses as well. European and U.S. policymakers could be working together as allies to create the safeguards needed to face the digital transformation, but it has become clear that each side of the Atlantic has adopted an adversarial position on digital policy. In this new era of digital geopolitics, the European Union must not only stand firm against external pressure but also champion its democratic mandate to shape digital rules that serve the public interest—not corporate power.