Ten Years Hence Artificial Intelligence Promise and Peril, Part 3: Digital Empiress, The Global Battle to Regulate Technology

Join us for a compelling virtual event, “Digital Empires: The Global Battle to Regulate Technology,” featuring Anu Bradford, Henry L. Moses Distinguished Professor of Law and International Organization at Columbia Law School. Professor Bradford will delve into the complex landscape of digital governance, examining the ongoing struggle to regulate technology giants on a global scale. Gain valuable insights into the challenges, strategies, and implications of regulating powerful digital empires. Don’t miss this opportunity to deepen your understanding of the evolving dynamics at the intersection of law, technology, and global power structures.

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Transcript

Brian 0:06

For those of you who don't know, I'm Brian Levy, and I teach here in the College of Business along with my colleague, Professor James O'Rourke, who usually runs this speaker series. Sadly, Jim could not be with us today, but happily, we're all here, and this is 10 Years Hence. Welcome. And good morning. Our focus today moves from autonomous vehicles for micro mobility to digital empires, the global battle to regulate technology. Our speaker this morning is Professor Anu Bradford, the Henry L. Moses Professor of Law and International Organizations at Columbia Law School. She's also a director for Columbia's European Legal Studies Center and a senior scholar at Columbia Business School's Jerome A. Chazen Institute for Global Business. Her research focuses on international trade law, European Union law, digital regulation, and comparative and international law. Some additional highlights from her background. Professor Bradford earned an LL. M. in 2002 and her SJD in 2007 from Harvard Law School. So for the typical U. S. lawyer has a Juris Doctor. These are degrees beyond a Juris Doctor, a Master in Laws, and A doctorate in laws, after completing her LLM studies as a Fulbright Scholar at Harvard Law School, Professor Bradford, practiced antitrust law and, European law at the international law firm of Cleary Gottlieb in their Brussels, office. she also has served as an advisor on economic policy in the Parliament of Finland and as an expert assistant at the European Parliament. Professor Bradford is the author of The Brussels Effect, How the European Union Rules the World, by Oxford University Press, which was named one of the best books of 2020 by Foreign Affairs. Her latest book, which I have a copy of here, and feel free to come up and take a look at after the, presentation. Her latest book is Digital Empires. The Global Battle to Regulate Technology, also published by Oxford University Press in September of 2023, and named a Best Book of 2023 by the Financial Times. Ladies and gentlemen, please help me welcome to the stage of the Jordan Auditorium, from Finland by the way, of New York, Professor Anu Bradford.

Anu 2:26

Thank you so much, Brian, from, for that really kind introduction and good morning to all of you. I am really delighted to be here and share the conversation with you. So let me start with the basic premise of the book. So the idea is what I'm observing, that there is increasingly a global consensus that technology needs to be regulated, but there is no global consensus on what that regulation ought to look like. So I think There are three primary ways to think about digital governance that we see today. There is the American market driven regulatory model, the Chinese state driven model, and a European, what I call a rights driven model. So let me walk you through the basic assumptions under three of these different governance models. So the American market driven regulatory model is very focused on free market. Free internet, free speech, incentives to innovate. The government is reserved a minimalist role, and the governance of technology is in practice handed over to the tech companies themselves. So it is a techno optimist, techno libertarian view of the world. The Chinese, on the other hand, are very focused on making China a technological superpower. And under their state driven regulatory model, they are prepared to deploy state resources to meet that goal. But the Chinese government is also deploying technology as a tool for surveillance, And censorship and propaganda in an effort to entrench the political power of the Communist Party and ensure social stability within the nation. So in this conversation, the Europeans are often portrayed as being forced to choose between the American model and the Chinese model, the two digital worlds, because the Europeans do lack a robust technology sector on their own. But I argue that the Europeans are not willing to, nor are they forced to, choose between the U. S. and China. The Chinese model for the Europeans is simply too oppressive. But the American model, in the European view, is too permissive. So the Europeans have carved out their own third way forward, which I call this rights driven regulatory model. It rests on the notion of a human centric digital development, where the protection of the fundamental rights of individuals, the preservation of democratic structures of the society, and a pursuit of a more fair. Digital economy, where the gains from digital transformation are distributed more equally in the society. That philosophy takes the center stage. So the Europeans are prepared to distribute power away from the large platform to smaller companies. To individual users and to the society at large. So these are the three primary ways that I think we can think about today, digital governance. And why do I then call these three leading regulatory and technology powers empires? So empire is a big word, it is a provocative word, and I use it more metaphorically. But I think it also helps us understand conceptually what is going on. Because none of the three regulatory models are confined to the jurisdictions, the countries themselves. Instead, each empire is proactively exporting its respective regulatory model abroad, and in doing so, expanding its relative sphere of influence. But what is interesting to me is that each of the three exports something different. So how does the American digital empire expand its influence in the world? The Americans are primarily exporting the private power of their tech companies. These tech companies were free to take over the world, and that is exactly what they have been, doing. So these U. S. tech companies are now present in pretty much all the markets around the world. The users are using their products and services, and In the process of doing so, being influenced by this ethos of American techno libertarianism. So if you think about, for instance, Meta's Facebook. They have over 3 billion users in over 160 countries around the world. That is part of the American digital empire. The Chinese are exporting something different primarily. They are mainly exporting what I call infrastructure power. Chinese tech companies are building 5G networks, undersea cables, data centers, smart cities, safe cities, exporting these surveillance technologies along what is known as the digital silk road that reaches across Asia, big parts of Africa, Latin America, And in doing so, the Chinese are building the digital backbones, the digital infrastructures for markets around the world and exporting Chinese digital authoritarian values in doing so. So what about the Europeans? What are they exporting? They are not exporting their technologies. If I ask the question, I ask you to name a European tech company. It might take you a while, but it won't take you long to name the GDPR. The Europeans are more famous for generating regulations that govern the technologies as opposed to generating those technologies themselves. But that is the European superpower. They are the regulatory superpower that are generating laws that are shaping the digital development, not just in Europe, but also outside of Europe. And this builds on my earlier So the Brussels effect captures this notion of a European unilateral global regulatory power. So the EU is one of the largest and wealthiest consumer markets in the world, and there are very few global companies that can afford not to trade in the EU. So as the price for accessing the European market, they need to obey European regulations. That's not surprising, but often these global companies find that it is in their business interest to extend the European regulation across their global production and their global conduct because they want to avoid the cost of complying with multiple different regulatory regimes. So simply by conforming, Their practice is to the most stringent regulation, which often is the European regulation. These companies can pursue uniform business conduct and access the global markets. So that's why companies like Apple and Google and Meta and Microsoft use the GDPR as their global privacy regulation. So the Europeans are exporting then their laws to govern these digital economies. if my first claim was that this is not just US versus China, Europe is also an empire, my second claim is that we are not seeing this neat splintering of the digital world into three separate technological spheres. The American, the Chinese, and the European world. Because each of them are providing a different layer. You have many markets around the world where you see U. S. tech companies, Chinese digital infrastructure, and European regulations governing those tech companies and that infrastructure at the same time. So that means that the three empires also collide. They come into conflict. In many markets, presenting tremendous challenges for global digital companies that at the same time need to comply with different demands by three different sets of regulators. So it is very hard for Microsoft at the same time to hand over data. to U. S. law enforcement agencies as part of a law enforcement investigation when the data is located in servers in Ireland and protected by the GDPR, which prevents them from handing over that very information that the Americans are asking them to hand over. And it's very hard. For companies like Didi, the Chinese Uber, to remain listed in New York Stock Exchange, they needed to pull out because of the conflicting demands. The idea that the Chinese regulatory agencies were, going after the company a few days after the big IPO, and that then unsettled. The U. S. investors, and leading to a broader concern in the U. S. that what happens without transparency on Chinese government practices. We cannot let the Chinese companies list in the U. S. if they don't disclose enough to U. S. investors. And the Chinese government says you don't disclose that information stays in China. It is very difficult to list in those circumstances. So that means that what we see a lot when these empires are colliding, we're seeing a lot of battles. And in my book, I focus on these battles and what this means for global companies and the governments and citizens around the world. So I distinguish between two types of battles, and I think that is helpful for us. At least I hope so. So I talk about horizontal battles and I talk about vertical battles. So the horizontal battles are battles between the governments, between the empires themselves. So the most prominent horizontal battle that we are observing is the US China tech war. It is the battle over technological supremacy, but also economic, ideological, geopolitical, and even military supremacy. That is a very high stake horizontal battle that is looming over the global digital economy. But there's another big horizontal battle that is also very, disruptive and consequential. And that is the battle between the Europeans and the Americans. And that's the battle over regulation. So Europeans are increasingly upset that American tech companies are coming to European market, taking too much and giving too little, exploiting European data sea and compromising their right to privacy in the process. Leaving the European Internet users surrounded by hate speech and disinformation on their platforms. Using their monopoly positions to disrupt the markets and destroy competition and abuse the power that they have. So the Europeans are now increasingly asserting their regulatory powers to rein in the behavior of these companies. Which leads many Americans to say that, look, it's not our companies that are overreaching, it's your regulators. That are overreaching and the Brussels effect is really compromising our regulatory sovereignty. So there's a lot of regulatory clashes between the Americans and Europeans. But alongside those horizontal battles between the empires themselves, each empire is battling vertically the tech companies in their own markets. So even the U. S. government today is now starting to second guess its commitment to techno libertarianism. There is a conversation shifting in this country, whereby if you ask, the public opinion, Americans want more regulation. They no longer trust these tech companies. The U. S. government is now considering that whether we actually ought to regulate as well. The U. S. Congress today agrees on nothing except on two things. First, that China is a problem, and second, that the big tech is a problem. So there are bills from both sides of the aisle proposing to rein in these tech companies. And if you look at President Biden's executive order on AI, a sweeping executive order of over 100 pages, tasking 25 different federal agencies to start regulating AI. It is no longer a manifesto of market driven techno libertarian world that the U. S. government is fully behind. But any attempt to engage in that vertical battle in the U. S. and start regulating those tech companies takes place in the shadow of that horizontal battle, which means that the U. S. will always exercise more restraint. The U. S. government is worried, regulating too. Intensively, those tech companies, because those are the very asset the US government needs to prevail in the horizontal battle against China. So we are always going to see more of a feeble half hearted effort to regulate vertically because the horizontal battle and the vertical battle are fundamentally interlinked. So let me now move to the question that probably interests you the most is what happens in these battles? Who wins? The horizontal battle and who wins the vertical battle. So let me make a couple of predictions here. So the first prediction that I make is that the US is losing the horizontal battle. The US is at least using, losing the ideological battle with its market driven model. Its market driven model is increasingly seen as ill suited to govern the challenges of today's technology. Countries around the world are abandoning The market driven model and moving the democratic countries towards a variant of the European rights driven model. Look at countries like Canada. You look at Australia, New Zealand, South Korea, Japan. They are moving. to also join the Europeans in the effort to reign in these tech giants. And I already mentioned the Americans themselves are now having hard conversations about the suitability of the market driven model. So if the American market driven model is losing, that is good news for the European rights driven regulatory model, which is gaining a greater appeal around the world. But I have three potential concerns that, that didn't. The European victory in this horizontal battle. The first is this idea that even if there is a thought now that the European model best protects the public interest, protects the fundamental rights of individuals, safeguards the pillars of our democracy, there is a concern that model is fundamentally incompatible with innovation. There are very few leading European tech companies and many people say it is because they are so focused on regulating these companies. That model does not generate innovations. And that is one hesitation that the U. S. has. Does that happen to us if we move to regulate too much? So I am very concerned about the state of European tech innovation, but I don't think it is because of digital regulation. It is not the GDPR that is holding the Europeans back. If the Europeans now decided to scrap the new AI Act, which is formally adopted in a few weeks, it's not that somehow, Two years from now, all these AI startups would emanate from Europe. I think there are more fundamental distinctions between the American and European tech ecosystems that much better explain why the tech companies emanate from here. So let me offer you four reasons why I think that distinction has very little to do with digital regulation. First, there is no digital single market in the EU. The market remains very fragmented, which makes it difficult for tech companies to scale. You have linguistic differences. It was much easier for Amazon to start as a bookseller in the U. S. and sell English speaking books. And whereas in Europe, the languages amount to more than 20. But there's also cultural differences. People in Portugal and Latvia watch different movies much more so than people in Delaware and Indiana and New York. So consumer demand is also more fragmented in Europe. But also legal differences, the regulatory differences persist across the member states. So the absence of a digital single market is what fundamentally holds the European tech companies back. Second, funding. There is no deep, robust, integrated capital markets in Europe. Capital markets are also more shallow, they are fragmented. European tech companies are relying on banks. As opposed to equity finance by, or venture capital, in general, by, in the U. S. European tech companies do pretty well in the first few funding rounds, but as soon as they need more capital They need to turn to U. S. venture capital, or often they are acquired by the large U. S. tech companies. Again, this is not the GDPR story. This is the story of integrated deep capital markets or their absence. Let me give you a third reason. And that is Approach Culturally and legally to support risk taking. You cannot be a successful tech entrepreneur if you are not comfortable taking risks. And the Europeans do everything to make you uncomfortable taking risks. Europeans have some of the most stringent bankruptcy laws in the world. You fail, you're done. You're not raising money again. Whereas in Silicon Valley, that's kind of batch of order, right of passage. You try really hard, then you fail, and then you get, they give you more money because it seems like you're working on really big things. In Europe, it just doesn't happen. And just culturally, there's a lot of stigma associated with failure in Europe. It is really embarrassing to go through bankruptcy. And the Europeans are very uncomfortable, to have that attitude, that risk taking really requires. I'll give you a fourth reason, and to me this is really important. You cannot be the leading innovator if you don't have the leading innovators. And the U. S. is recruiting from the global talent pool. The U. S. is getting the best innovators from all around the world. The STEM students who come to our universities and decide to stay here. they're really bold entrepreneurs who are really intrigued by the opportunities to innovate in the U. S., to monetize their innovations in the U. S. The Europeans don't have the same commitment to diversity and immigration. That has forced them to recruit from a much smaller talent pool. If you think about just over one billion dollar startups in the U. S. Over 50 percent of those have an immigrant founder. And let's focus for a moment for the leading tech companies, the household names that we all think about. Steve Jobs, the founder of Apple, son of a Syrian immigrant. Jeff Bezos, the founder of Amazon, second generation Cuban. Elon Musk, the founder of Tesla, South African. Eduardo Saverin, the co founder of Facebook, Brazilian. Sergey Brin. The co founder of Google? Russian. And I could go on. This is not the GDPR story. This is a much bigger issue of how the Americans have managed to create the robust tech ecosystem that generates those innovations. So I spent some time on this because I wanted to try to persuade you that the idea that if the U. S. were to move towards the European rights driven regulatory model, that somehow that would inherently hold That's not going to dismantle our capital markets. That's not going to rewrite our bankruptcy laws. That's not going to prevent the immigrants from coming to the U. S. I'm much more worried about two other problems that I think the European victory in the horizontal battle will face. My problem is Europeans are not over regulating. I think Europeans are under regulating, so they are not doing enough. They are not successfully Enforcing their regulations. They're very good at passing laws, but they are not good at implementing those laws. There are very well known deficiencies in Europeans implementation of the GDPR, for instance. The Europeans have imposed over 10 billion in fines against Google in antitrust cases. Google's market share has hardly moved. This has been very ineffective. So I think that's the biggest problem that the Europeans have. They may be able to win, The ideological battle, but that is a hollow victory. If they cannot entrench their market driven model, their rights driven model into actual market outcomes, that would mean that the American model prevails in practice. And let me give you a third, issue that I think is real and that dims European victory. And that is, European model is doing very well in the democratic world. It is not doing well in the authoritarian and authoritarian leaning world and that world is getting bigger. We sometimes forget that. There's a lot of countries around the world that have no interest in the European rights driven model. They look at China, and they like what they see. And the Chinese model is getting very popular. And let me give you two reasons why it's very difficult for Europeans and Americans or any of our democratic allies to try to persuade that part of the world to abandon the Chinese model and rather subscribe to a variant of our model. One is the significance of the infrastructure power. That is real. China is providing these countries a path to digital development. That's what they need. The Chinese infrastructure is cheap, and it's pretty good, and we don't offer them an alternative. Are we just going to tell them not to take Huawei? We tried that. The Americans were warning the Prime Minister of Malaysia, why do you let Huawei build your 5G networks? You're going to be beholden to Beijing, you're going to be spied by Beijing. You know what the Prime Minister responded? What is there to spy on in Malaysia? Everybody doesn't share our concerns and values. There are many markets around the world where people feel massive threats of violence every day. They love having Chinese surveillance cameras. They want more law enforcement. They say, look, privacy? You Europeans, that's your luxury concern. It doesn't 50. When I wake up in the morning, how much privacy I have. I want basic digital development. I want personal safety. Bring on more Chinese surveillance here. So we need to also understand that our values cannot be sold, and especially with the big demands of abandoning a critical path to digital development in these countries. And let me say a second thing, and I'm very uncomfortable making this argument. You know, when you write a book and you write a paragraph and you don't like writing it, but it needs to be there because I think it's something we need to recognize. It's hard for us to tell those countries not to follow China because China has shown to the world that freedom is not necessary for innovation. They have managed to create a thriving tech economy without So we cannot tell those countries and say, you choose to follow China, you get control, you will not see economic growth, you will not see innovation, you will not see development. They look at China and say, well it seems like I can have both. And I am a huge proponent of liberal democracy, I like to think that all the good things stem from liberal democracy, but it is hard for us to say that fundamentally you do not see technological progress. If you choose a state driven model. China has shown that to be wrong. Let me have a caveat here, though. China is struggling to keep up with the U. S., for instance. U. S. companies with generative AI. Part of the reason is that they need to teach their generative AI models not only, sort of, how to speak, but how not to speak. It is very difficult because they need to make sure that the generative AI doesn't undercut the generative AI. The censorship regime and the messaging remains consistent with that of the Chinese Communist Party. So yes, it can be that there are domains of technology where we can say that ultimately, being free, you are able to innovate more. But it is a very hard blanket argument for us to go in advance. So this now takes me where I want to really end, end my remarks and open it up then, is that What is what I think the most important battle of all that we all need to focus on? And that is the battle over the future of liberal democracy. And I want you to realize that battle can be lost in one of two primary ways. One builds on exactly what I was saying before on China. Liberal democracy will be lost if we lose the horizontal battle to China, and the world is turning more digital authoritarian. But liberal democracy will also be deteriorated if we lose the vertical battle to tech companies. That is also not governance that is rooted. And it is well plausible that we will lose that fight as well. Americans have a very hard time legislating. We have a dysfunctional polarized Congress and nothing is coming out of that building. The Chinese Communist Party doesn't have a hard time legislating. If China decides it's time to crack down on big tech, it is time to crack down on big tech. The Europeans are very good at legislating, but I mentioned they are not good at enforcing. The Chinese government is good at enforcing. It is not that the Chinese tech companies are dragging the Chinese government to independent courts in China and challenging the enforcement actions. What happens here and what happens in Europe. So if we cannot show to ourselves and to the world that there is a liberal democratic way. To govern technology, that our model can produce regulations and enforce those regulations. We are forced to concede that the digital economy is either governed by authoritarians, whereas democratic governments are destined to fail in that same endeavor, or the digital economy is governed by tech companies, which means the true digital empires are either the authoritarians, or the tech companies. And that is not a good outcome for anybody who believes in liberal democracy as a foundation for our digital society. So let me maybe leave you with that thought and I'm eager to open it up and hear your thoughts. Thank you. That was a great presentation. I come from Latin America and, You are totally right. China has a big influence in Latin America. I like what you said that most people don't share the values and they just fall for it. They think they are their saviors, but like we're just dooming our country or Latin American countries. And I feel like one of the reasons is poverty and all the problems that Latin America carries. Yeah. what would you think would be a good way? to show the values and make people understand in order for not to fall on the Chinese regime in that sense. One thing that China does really well is that they engage in very effective economic diplomacy. They go to these countries, provide the kind of umbrella for their tech companies when they strike these deals, and really kind of force the relationships to say, what can China do for your development? And they put out cash. It's very hard for European. There are a couple of competitors that Huawei has in 5G networks. The U. S. doesn't really have a Viable competitor Nokia and Ericsson do, but they cannot compete with the prices that the Chinese offer because they're heavily subsidized. But I think there is the idea that the Europeans have never really done collective economic diplomacy and sort of go to these countries and say that, okay, this is what you need. This is what Europe can do for you. Economically, politically, diplomatically, and also really kind of explain, not just conditions, we need you to accept our values for us to give you something. But in a more pragmatic way, what you're getting from China, we can also give you something, but we give you something more sustainable long term. And really spell out, it's true that we cannot just expect that we mention the Chinese surveillance and everybody's worried, And run away from China, but also one thing we need to think about that for U. S. to tell that China is not a good partner, turn away from China and come to us. Well, we need to have our house in order. We are protectionists, we are under Trump by America. Sort of America first, under Biden it's American workers first, and that's also not a good message to tell the rest of the world, that we are not really open to business. We care about ourselves, but somehow you should care about us, if we don't care about you, because we just care about increasingly a much more protectionist America. So I think we need to be also very careful with that. The Europeans have started their global gateway as a alternative to the US. The Chinese Belt and Road and Digital Silk Road. And I think that also just needs concrete investments. It needs the diplomatic support. It needs the financial power for that to be effective. But I think those are some of the thoughts that I have, is that what we need to then make sure that America would remain a sovereign state. It's a solid alternative and an engaged alternative and that understands not just what are our terms of collaborating but what is it that these countries need. Great question. Thank you. My question is, what is the long term consequence of developing countries using Chinese technology and, is there any way to reverse it? At some point, the developing country becomes developed and if they want to reverse that, would that be possible? Partially I think it builds on what I said about the idea that the developing countries also need to feel they have a stake in digital development, and there needs to be a real commitment by developed countries to make sure that we can democratize them. access to technologies, including artificial intelligence. There is a great potential for foundation models, for instance, to provide a platform for technological development. In developing countries, many have said that it is a great equalizer that can level the playing field. At the same time, if it's made so widely accessible that developing countries can access that, others say, look, that doesn't mean anybody, including bad actors, can access that. So how do we make sure that it's just It's used in beneficial ways in countries that need it for their development while at the same time restricting the access in a way that we can mitigate any harms from open access as a principle. But I think one, one thing is that there really needs to be an understanding of the shared prosperity around digital development and what opportunities and how much it hinges on technological opportunities for these countries. so right now if you think about AI it's not just. It's very concentrated, the development, in the leading countries. And in the wealthy countries. and, the idea is that the developing countries have been kind of at the mercy of having the technology provided to them by the leading developers. And I think there are some institutions that are now thinking about AI governance that are, again, very much replicating the existing, sort of power structures, the G 7, the OECD. But then, The UN has, for instance, its own high level advisory group to say that we are the institution that really has the broad base and we can make sure that this, development is more equal. China has jumped in and say that, look, you don't care about developing countries, you meaning the US and the EU and the rest, which is why we have our own global initiative that really brings the developing countries to our fold and helps them. So I think there is the idea that if I. I would now ask them to play the digital empires off from each other and basically say that this is what we need from Europeans and Americans, or we are going to do what China is giving us, and we are going to rely on them. on that particular technology. So I don't think there's an easy solution, but I think there is an increasing understanding. Those are growing markets. That's where the growth potential are. The world is unstable as it is. We really need to be able to manage this globally. And it's important for the U. S. and the EU that these markets are managed in the way that they willingly are. Align themselves with the kinds of interest that we have as democracies and we can do our way to halt also the spread of the digital authoritarian norms around the world.

Brian 36:58

The lecture series is called, Ten Years Hence. And, our Congress seems to specialize in calling sort of tech leaders up to Congress to have a soundbite. let's beat up Mark Zuckerberg. And then he goes on his way, and years pass, and nothing happens. do you think maybe within the next ten years, perhaps, our Congress might act, or will it, So I

Anu 37:28

hate to say this, but I've stopped holding my breath with U. S. Congress, because it's just not sustainable. And even if there are some bills, for instance, some antitrust bills, that are clearly reasonable, that are thoughtful, that are bipartisan, that are not extreme. And they falter. It sometimes makes me wonder, what does it take? I think there are some slivers of hope. There are moments, but it's pretty like low hanging fruit. That when it comes to at least protecting our children from online harms, that's one of the domains where I see some attempt. Where the European model can actually be institutionalized also in legislative frameworks in the U. S. But if you think about the magnitude of the problems that we have, and that call for legislation, it is really Unfortunate how paralyzed the US Congress has been and how much it's free riding on Europeans. So basically, the Europeans are providing the regulatory frameworks. That's the Brussels effect is often the best hope of American digital citizens. You want their privacy to be protected. They cannot turn to their Congress. There was a moment, for instance, if you think about that commitment to free speech and the idea that this unregulated platform, is the best way to foster inclusive, robust, Conversations and Enhanced Democracy, when if you replay the videos of the January 2021 capital insurrection, where the disinformation fueled by social media almost brought our democracy into its knees, it's very hard for anybody to look at that and say that, look, these tech companies have this, we can leave to their own devices. So we kind of lost our faith in tech companies. Moderating content, but many Americans are not comfortable with the government moderating that content either. And then they're not comfortable with nobody doing this. So it's very hard to sort of translate that into actual legislation. So there are many reasons why I think we just cannot get the Congress to act, but I think ultimately, it is irresponsible, and that is kind of ceding us to this idea that we are just at the mercy of a techno determinist future, or hoping that the Europeans do effectively also enforce, so that we can see actual effects. And, we can have our democratic model deliver.

Brian 39:53

All right, well, one more voice hoping our Congress will act responsibly.

Anu 39:57

You suggested that, you know, regulation isn't one of the main reasons for the disparity. And, the innovation between the U. S. and Europe, but culture, language, and immigration of just top talent from all over are, you know, far more important factors. But what would you say to someone that, you know, says it's kind of the other way around that, you know, the innovative culture, the high talent immigration are the products of the less regulation. And if there was that less regulation in the EU, then you would be able to attract, You know, more talent, and it would cultivate a better culture of innovation. Yeah, very good. So in many ways, yes, it is a product of some regulation, including bankruptcy regulation, including labor market regulation, including taxation, including those existing regulatory differences. That the Europeans have failed to remove by harmonizing regulation around whether it's e commerce, the warranties, what have you, that prevent e commerce from taking place as much across the border. But my point is that it's not the digital regulation, it's not the commitment to fundamental rights and interests. Driven regulation or that they are the kind of, the regulations that we generally think about antitrust, the privacy, the content moderation, the artificial intelligence. It is the broader set of cultural attitudes, including the risk taking, but also bankruptcy laws, the tax codes and issues like the labor market. So yes, that's still almost entire kind of society is engineered through regulation. But the question is that. We don't need to touch those in the U. S. to move the U. S. closer to better protection of privacy. So I want to draw the distinction, but it's very helpful for you to invite me to clarify that, that there is the digital regulation and then the kind of proto societal structures where I think the problems are much more severe. Adding on to the regulation question and sin from what I'm understanding, your kind of suggestion or recommendation to the American model that, yes, more regulation, is required or recommended. Yeah. my question to you would be, in regards to digital regulation, could you expand upon more what that means and what some of those regulations you would recommend to the American market? what would be the, some of the top regulations? So one is the, have a federal privacy law. So I think that would be an absolute key, that we need to understand that our data can be exploited commercially. by these companies, but also it can be exploited by governments. For national security apparatus, if it's not protected, protect it properly. And I think that's something that the GDPR is attempting to prevent. So the idea that data is something fundamental that we need to own, we need to control, and we need to decide how and who is using that data. And to me, the federal privacy law would help the Americans deal with data. Two problems simultaneously in addition to the domestic problem of exploitation of data. So one is that it would help deal with the Europeans that are now reluctant to transfer data. To the U. S. And I cannot sort of emphasize how much damage Snowden revelations did to American status in the global digital debates when there was an understanding of the extent to which the U. S. tech companies are handing over data to the U. S. National Security Agency and how much that is breaching the data privacy of Americans and the foreign citizens. So one thing, it would help us deal with the Europeans and restore those data flows. But it would also help us deal with TikTok problem and the fear that Chinese are taking our data. So right now we're having this haphazard attempts to let's ban TikTok. It is not easy to ban TikTok. There's still free speech and other issues that we can't have government decide which platforms can carry our content. But if TikTok was beholden to very strict federal privacy law, That would be a basis for us to limit how TikTok is using our data. So I think that's one thing that we absolutely would need to have a federal privacy law. But we also need to revive our antitrust laws. The markets are extremely concentrated. This is no longer the kind of free market. That Americans have dreamed about always and believe that is really important. Markets are so concentrated that smaller players cannot enter and offer an alternative. So antitrust laws, the way they are exercised today, do not really, they are ill suited to understand The kind of dynamic technology market. So I think we do need less market power. We need less abuse of that market power because ultimately that's the root problem. These companies have become so powerful. They have amassed so much power, economic power, political power, cultural power, societal power, that they can no longer responsibly handle. And that power also needs to be disseminated. And then I would say with artificial intelligence, as one example too, is that there are tremendous benefits. And there's no argument to say that we somehow would try to do the moratorium and halt the development of AI. It can be transformative for healthcare, education, agriculture, manufacturing. None of the societies can forego those gains. But there are serious harms associated with ungoverned AI. And our government needs to understand that as well. I'm less focused on the existential risks. It's hard for me to put probabilities in obliterating humanity, but I'm worried about weaponizing AI in military conflict. I'm very worried about thinking about the arms control that is necessary, but I'm really worried about it distorting our reality and our ability to make decisions. And in the context of elections, we have over 50 democratic elections this year around the world, not small ones. The United States, the European Parliament, the UK, India, Mexico, Indonesia, these are big. And we already are. Struggling with disinformation, distorting these elections. Now that's amplified with AI. So it's absolutely necessary to set some guardrails on so that we understand how AI is being used in these settings that can really be important for individuals and societies. And then the content moderation. Look, the Europeans also are committed to free speech. It's not that the Digital Services Act is somehow making the European government choose which tweets to But there needs to be transparency and accountability that we know how these companies are moderating the content. That we can actually open the black box of the algorithms and know why we, our societies, and conversations are shaped. by these few companies, the way they are being shaped. So those are, I think, some of the issues that I think ought to be part of the urgent digital regulatory agenda anywhere in the world, but very much in this country. I think there's three reasons why the Americans are moving closer to the Europeans. So one is that the public opinion is really shifting. If you just look at the Americans are just getting tired of this and we've had our share of scandals. So one more Cambridge Analytica and, you know, the capital insurrection. So what happens this year in election? What's the role of AI disinformation in that? I hate to wait for scandals, but these have now triggered the sort of shift in expectations. So one is that I think the public no longer is buying into this governance. These companies have failed us and I am not sort of calling for breaking up these companies. They do nothing good. They do plenty good. But they've also failed us repeatedly and spectacularly and we know it. If you have the whistleblower Francis Haugen go and say that they know they are exploiting the vulnerabilities of teenagers, why do we let them continue to do that? The Europeans have now banned targeted advertising on minors. If you know that a teenage girl has a eating disorder, you're not feeding her advertisement that make that disorder worse. So we need to do at least the basics of understanding that, that we have enough information now to respond to that shifting, popular demand. Second, the Americans are understanding now the Brussels effect. Increasingly, they realize that we can be spectators. We let the Europeans write the rules and we have no say in that. That's not also the American way. So why do you rather work with the Europeans and try to write the rules together? So if you look at when that executive order on AI was, issued. Two days before the big AI summit in the UK, the US didn't want to go there as a spectator. Everybody else is regulating and we are just basically looking at this from the distance. So I think Americans need to understand that the global momentum is there. The American exceptionalism doesn't serve us that well because then the rest of the world will regulate and we are not part of that conversation. But then there is also the Europeans and Americans have a shared. goal, which is that they are still committed to liberal democracy, and there is a shared concern about the role of China. And that is also a basis. To move closer to one another. And the direction has been towards the European regulations because of the two things that I mentioned earlier. The Europeans have up until recently been quite hesitant to buy into this hawkish approach towards China. The Europeans are more exposed to doing business. In China, they need that market, and there are many companies, including in Germany, that put a lot of pressure that we can't afford to abandon the Chinese market. But I think something has shifted now that the Europeans are moving closer to the Americans in their approach towards China, and I would really pinpoint as the main reason for that is China's refusal to condemn Russian invasion of Ukraine. That's an existential battle for the Europeans, and that has made it very clear for the Europeans that China is It is not condemning when somebody's violently, vehemently, breaching international law and engaging in illegal aggression and basically bringing war to Europe and undermining the sanctions and the efforts to stop that war. So I think in many ways I see that as a foundation for greater transatlantic cooperation. But then, you know, I hate to say that the Europeans, are not fully trusting the Americans either. And I think there's the question of yes, we are now able to collaborate with this administration, but with the change of administration, there's no guarantee how sort of American approach to international cooperation would evolve in the next administration, if it's not the continuation of this one. So I think there are many uncertainties. around this, but, but I think there is a reason for the Americans to know that we sense the momentum, we read the room domestically, the public opinion, and the developments globally. We want to be part of it rather than be left out of it, and let's focus on the big battle. The big battle is to make sure that there's an alternative way to govern, and that's where the Europeans and us should collaborate. One question would be that if Europeans can't do this, How can the rest of the world do this? They are very good bureaucrats. Like in the European Commission, these are well trained, smart civil servants. But this is very hard. You need lots of resources. I think there was a good statistic example that, so Ireland is the main enforcer of GDPR. Because it's enforced by member states, even though it's an EU level regulation. And the lead enforcer is the one that is the country where the headquarters of the companies are. For tax reasons, most of these US tech giants are in, in Ireland. So the year the GDPR entered into force, the Dublin, the Irish Data Protection Commission was vested with a 9 million budget. That's about the same that the leading US tech giants, based in Dublin, make every 10 minutes. It is a lot to try to police these companies. And it's every minute there's something like, you know, hundreds of hours of YouTube video down, like uploaded. How are you going to police all of that? We still need tech companies to do that through their algorithms. So this is not an easy thing to enforce. but let me say something that I think is inspired by your question directly, is that if the tech companies feel, as they now increasingly feel that the net around them is tightening, it's not just the Europeans that are going after them. It is also now, The Australians, it is the Canadians, it is the Japanese, it is the Koreans, they have all these battles in Russia, they have them in Turkey. At some point, they can't fight all the different, their fronts at the same time. And if the US is piling on, it really helps. Because at that point, you can no longer say that, I don't comply. We see more proactive compliance. So there was, for instance, the question I was getting, that when, Meta was basically and has been withholding the threats, because of regulatory constraints. So I was asked, well, you can't, then, users are left without these products because you regulate too much and Europeans don't get these, and for a moment it looked like threads could be something really cool. And there, I said that, look, I don't think companies like Meta can afford the European market because, ultimately, They can't go to China. There's no way of going to the Chinese censorship regime if you're operating a search engine or you're running a social media platform. You can try to go to India. Lots of internet users there. But as long as your revenue model, your business model relies on advertising, Per user advertising revenue is so much higher in developed markets than in developing markets, you need to pick up a lot of users in order to compensate what you use in Europe. And now, Meta said they are looking to enter Europe. So ultimately, if then, more jurisdictions say that we also don't accept your business model, where do they go? So there's this, this, quote, I, that I cite authors in my book to say like, I don't I believe that the states are in charge. They remain the fundamental units around which the societies are built. Tech companies remain beholden to governments, so they can't refuse to pay taxes if we make them pay those taxes. They cannot re force their way into mergers if we use our antitrust laws to prevent those mergers. But ultimately, the question, this is the quote that I was mentioning, is that what do you expect to be around 100 years from now? Facebook or France. So ultimately the states still matter, but the states need to deploy the power that they have. They have the power and they just need to use them. And the more states use that power, the less opportunities to these tech companies are there to say that, Look, I am doing it by my own rules. So they are already forced to pick their battles. They cannot fight. Tens of jurisdictions at the same time against privacy, content moderation, AI, online copyright, antitrust battles. So I think that is the secret, and having U. S. as part of that battle on the side of the history that still says that, Look, we like much of what you do, but ultimately we are in charge, I think that makes a big difference. Just a simple question in the sense that if the European, approach is better at regulation, I'm just curious to know maybe what can, what factors are contributing to them being better at regulation? more, pre, proactive compared to the U. S. Cause oftentimes we see that they'll bring these tech executives up in front and they'll be asking them questions that they, that seem pretty basic in a way and they don't really even understand a lot of the technology. So I'm just curious to know what factors that are giving the Europeans the advantage. Yeah, very good. So one issue is that there is generally more trust in government. And less trust in markets. The Europeans have not bought into this market orthodoxy thinking that markets always know the best, they sell correct, and these companies can govern in our interest. So I think the Europeans, it's almost like part of this social market economy model that there's a wide acceptance that government's presence can improve outcomes. And, skepticism of, of the motivations of companies. And I think that is this much more distrusting government in the US. So I think that's one thing. And these issues are not as polarized. So even the European right is committed to social market economy, is committed to regulated economy, is committed to addressing climate change, is committed to holding the tech companies accountable, is committed to some degree of redistribution of economic power. So the political divisions. are not there to the same extent. The second, and this is really important, the tech lobby in the U. S. is relentless and even more relentlessly effective. They try to be rentless in Europe, but they are not as effective. And one reason is the decisions like Citizen United that just made, basically has no limits to how much money you can throw to support elections. The elections are much more expensive in this country. It's very hard for you to be a politician and say I don't care about raising money. And where does the money come from? These companies are very expensive. important players in as political donors, and they have a lot of leeway in our political process. There's lobbying in Europe, but research shows that corporate lobbying is very much balanced and partially offset by a lot of access that NGOs and civil society have to decision makers. you can see much more kind of balanced outcome of lobbying in the European political process. I would say yes, the ideological, acceptance of government's role, the absence of the same degree of political polarization that has made our Congress relatively dysfunctional whether the Europeans still have a functional legislator. And third is really the lobbying and the role that tech companies play in influencing the political agendas in this country. So I would say that, and of course, too, these are our companies. These are American companies. So many would say it's politically less costly for the Europeans to go after them, as opposed to Americans to go after them. And there is this, so I've written a lot against this idea that the Europeans are just doing So, again, I'm not doing this out of protectionism, but, but right now, I think the entire world is moving towards greater protectionism. So the US in many ways is playing Beijing's game. Export controls, investment restrictions, massive subsidies, the European suburban strategic autonomy. Right now, Europeans are thinking much more about their vulnerabilities and moving towards protectionism, but traditionally, it's not the kind of protectionism these American companies, hence Europeans are able to go after them. Europeans are tough also vis a vis European companies in the domains, in the sectors where they are the big companies. So I think that's probably the combination of issues that explains that. Let me address the one more thing because I think it's important you say that look, is there an understanding of technology that, that gives the legislators the confidence to regulate this industry. And it's almost seems like this, many people are entertained here by watching congressional hearings and Our congress, representatives, they don't understand AI, so the questions they ask are basic. And I think it's fair to say that there is a knowledge gap. But these tech companies also exploit that to their advantage and say, look, we know this, so we can regulate this because we understand the technology. And I'm not very sympathetic to that. Our lawmakers are regulating many domains, In which they are not experts. Few of our lawmakers know how to build an airplane, yet we are quite comfortable that we regulate airline safety. Our lawmakers don't know how to develop vaccines or medic medicine, and we generally are pretty comfortable that there's still a control of pharmaceuticals and regulatory approvals when it comes to medicine. The same thing about ai. You don't need to be an expert in the technology of ai. Yes, you should be educated and there needs to be a conversation with tech developers. But this is also not something that they can only legislate in the domains in which they are experts. And one more thing about AI, this is not just about technology. It is also about how this technology implicates democracy and fundamental rights. And that's not the expertise of tech companies. Mark Zuckerberg should not be in charge of democracy. That's not his expertise. And that's why we need democratic lawmakers to regulate these technologies as well.

Brian 1:00:58

That'll be, have to be our, the last word. We've got a little token of appreciation for Professor Bradford. Please join me in

Anu 1:01:04

thanking her.