Transatlantic Technology Policy Pipeline 2024

What we got right, and where we missed the mark in 2023:

“US and EU move forward on AI guardrails and research and development.”

This prediction was largely correct in substance, but we underestimated how ubiquitous the AI policy conversation would be. For policymakers and the public, 2023 was a landmark year for AI regulation and awareness. The EU finalized its AI Act in December, although significant questions remain, and the White House’s Executive Order launched a government-wide effort to guide responsible AI development and deployment. Meanwhile, ChatGPT and OpenAI have become household words.

“Can the Trade and Technology Council (TTC) resolve digital challenges?”

We noted that the TTC faced obstacles to becoming a useful venue for transatlantic cooperation. Our uncertainty about its long-term effectiveness was mostly vindicated, as the May meeting produced few tangible results, and the planned December meeting was postponed with a tentative next meeting set at the end of January 2024. The EU hoped the TTC would facilitate digital policy coordination, while the United States sought coordination on Russia and China. Despite shortcomings, the TTC provided an important venue for government connections. Election turmoil could mean the political will needed to sustain such a forum is lacking.

“New agreement—and legal challenges—ahead on transatlantic data flows.”

We correctly foresaw the EU Commission’s adequacy decision on the EU-US Data Privacy Framework, but the expected immediate challenge by Max Schrems and his non-profit, none of your business (NOYB), did not materialize. He has announced plans to challenge the decision in 2024, citing no significant change in US surveillance law. The EU General Court also dismissed a French Member of Parliament’s challenge.

“Export controls and sanctions will thwart Russia’s war effort, but EU-US approaches to China differ.”

Following extensive export controls against Russia in 2022, we expected the measures to continue to hamper Russia’s wartime economy. But they did not prove to be a game-changer, as Russia rerouted supply chains and used a “ghost fleet” to transport oil. At the same time, we may have been too quick to dismiss US-EU cooperation on export controls on China. The EU announced it would assess export controls on sensitive technologies.

“Platform regulation takes center stage at the US Supreme Court”

The question of platform regulation, in particular Section 230 of the Communications Decency Act, dominated headlines in February, but the court took a cautious approach in its rulings in Twitter, Inc. v. Taamneh and Gonzalez v. Google. The court sidestepped the Section 230 question, instead ruling only on claims under the Anti-Terrorism Act.

2024 Predictions:

Artificial Intelligence: The EU advances on AI policy, while US policy remains fragmented

Despite some last-minute member-state objections, we anticipate that the EU will formally adopt the Artificial Intelligence Act as a legal enforcement framework. Enforcement timelines vary; the EU can enforce prohibited practices only after six months, and sectors already under regulatory oversight only after three years. Expect lawmakers to discuss consumer protection around AI next as the AI Liability Directive and the AI Product Liability Directive move through the legislative process.

Congress has shown intent to legislate AI, hosting nine congressional insight forums in the Senate, holding over 100 congressional hearings, and introducing over 200 pieces of legislation. Nonetheless, the US AI regulatory landscape will resemble currently fragmented privacy laws—a patchwork of state and local regulations and widely-applied court decisions on extreme use cases. 2024 will see lawmakers still trying to figure out how best to regulate AI, receiving substantial input and resources from tech companies.

Foreign actors will leverage generative AI to decrease voter turnout or influence election results. These ongoing concerns, though familiar, may spur more aggressive actions on AI regulation, especially if politicians fall prey to AI-generated deepfakes.

Lastly, progress will be made on transparent and coordinated AI use across the federal government following the AI Executive Order, with 50 federal agencies or federal entities tasked with responsibilities related to safety, innovation, and privacy.

At the same time, there is a dearth of enforcement tackling AI-related challenges on the global level. International bodies including the G7, G20, OECD, UN, and ISO each have ongoing policy processes aimed at addressing AI risks and opportunities.

Election rhetoric: More bite than bark

The US elections will distract from tech policy debates as lawmakers focus on campaigning. This may create space for civil society actors to influence the discourse.

Children’s privacy issues will gain attention. Primary candidates may endorse existing legislation emphasizing parental control. In his 2023 State of the Union address, President Joe Biden advocated for protecting personal data online. There will be a resurgence in public attention to social media and its spreading of falsehoods, especially about election security. But a hyperfixation on generative AI’s role in creating believable falsehoods misses the bigger picture: Layoffs within trust and safety teams have made platforms ripe for misinformation. Platforms have already begun reverting to pre-2016 policies. Meta and YouTube, for example, are allowing election denial in ads and content.

New policies will also impact the 2024 EU parliamentary elections. EU approaches to technology policy may change depending on whether Ursula von der Leyen remains president of the Commission or a challenger such as Thierry Breton takes over the role.

Data flows: Don't hold your breath for a lasting agreement

Despite calls for an international framework for trusted data flows and progress through bodies such as the G7 and the OECD, a comprehensive global solution will remain elusive in 2024.

In the United States, fewer companies have signed onto the EU-US Data Privacy Framework than the previous Privacy Shield agreement within the first six months. Many see this agreement as the third iteration of the Safe Harbor agreement and expect it to be struck down. US companies will increasingly use standard contractual clauses that allow them to transfer data regardless of whether an adequacy agreement is in place.

One sticking point is that EU privacy activists believe that Section 702 of the Foreign Intelligence Surveillance Act, which allows US intelligence agencies to obtain electronic communications from foreign individuals abroad, violates the conditions needed for an adequacy agreement with the United States. Congress extended the program until April 19, which could allow year-long certifications from FISA courts to extend intelligence collection through April 2025.

Chips: Investments in the domestic semiconductor industry will increase critical mineral tensions

The United States and the EU will continue to deny China access to advanced semiconductors and manufacturing equipment. China, however, controls much of the supply chain for key raw materials. Tit-for-tat responses to new export controls could accelerate, with broader implications for the sector’s complex supply chains.

The allocation of US CHIPS for America funding will advance, and those investments will reveal strategic priorities. The first investment went to a British company building a mature-node production facility for defense programs. The EU will continue to invest in domestic chip production, but may reassess trade relations with the United States, due to deeper ties with China, and shifts in US security commitments, such as in Ukraine.

Demand will remain strong for the high-performance chips needed for AI. New materials such as graphene, carbon nanotubes, and solid-state electrolytes will offer advantages for chip design and performance but will also require new standards, regulations, and partnerships.

Trade and export controls: A balancing act against China

The US elections could significantly impact the US-EU trade relationship. The United States has already suspended digital trade talks within the Indo-Pacific Economic Framework following political pressure from Democratic lawmakers. Donald Trump has promised significant new tariffs if reelected. Disagreements over digital services taxes, protection of digital rights, and regulation of digital competition could also impede progress towards lasting digital trade agreements.

The US Department of Commerce’s Bureau of Industry and Security will increase its export controls, expanding the range of products subject to US control and enforcement. There will be more cross-government cooperation, including more investigations under the Information and Communications Technology and Services regulations.

The EU plans to renew its export controls on dual-use products and aims for closer coordination across member states. The Commission’s collective risk assessments with member states on advanced semiconductors, AI, quantum technologies, and biotechnologies could result in export controls as soon as spring 2024.

Privacy: GDPR adjusts to new EU legislation, and US law further splinters

In 2023, five state-level data privacy laws took effect in the United States. This trend will continue in 2024, with five state laws coming into force. While a federal data privacy law is unlikely, companies will lobby for federal legislation with preemption.

The larger trend in US privacy policy will be in support of children’s online privacy and safety bills. Maryland and Minnesota will consider legislation to protect children online, with more to follow. At the federal level, the January 31 Senate Judiciary Hearing with Meta, X, TikTok, Snap, and Discord CEOs testifying will generate buzz. However, it is unlikely that even popular bipartisan bills such as the Kids Online Safety Act or COPPA 2.0 will pass in an election year.

The EU will also review its privacy legislation in 2024, with the first major EU Commission report on the GDPR’s application due May 25, coinciding with the EU parliamentary elections. The preliminary 2020 report found that it would be too soon to consider new amendments, but 2023 public consultations may lead to action and a debate that will be closed after the May 2024 review.

Broadband: Continued progress, but not universal

Funding in the United States, such as the Rural Digital Opportunity Fund and the Infrastructure Investment and Jobs Act, prioritize fiber deployments. Fiber preference could be better for the climate, but will not be ubiquitous, as many rural areas still rely on older or satellite technology. The US government will continue to rely on Elon Musk’s Starlink infrastructure, but new efforts such as Amazon’s Project Kuiper may increase private-public partnerships.

The Affordable Connectivity Program, which provides monthly subsidies to low-income households, will expire in mid-2024 without further congressional action, ending access to affordable broadband for millions. Despite historic investment, the United States will not mend the digital divide in 2024, but infrastructure investments are progressing.

The EU continues to fund broadband investment through the European electronic communications code, support for 5G networks, and the abolition of roaming charges. Commissioner Breton is also expected to set out a strategy on broader rules for the telecoms market, including the Digital Networks Act, which could force Big Tech firms to split network costs with operating companies.

TikTok: Here to stay, but legal battles will continue

A TikTok ban looked almost inevitable in spring 2023 but given free speech concerns and election-year realities we do not expect Congress or the White House to pass a ban in 2024. The share of adults supporting a government TikTok ban declined from 50% in March to 38% in December.

Action is ongoing at the White House. The Committee on Foreign Investment in the United States is reviewing the app, and the Justice Department is investigating surveillance of journalists. At the state level, Montana appealed a ruling that blocked its TikTok ban from going into effect and Utah has sued TikTok for deceiving parents about the safety of the platform.

Internet freedom: Multilateral fora lead over national initiatives

2024 is poised to become an important year for global cooperation on internet freedom. The United Nations’ Global Digital Compact will present principles for “an open, free, and secure digital future for all” and is slated to be adopted in September. Other important global initiatives include the third Summit for Democracy, hosted by South Korea, and the Freedom Online Coalition, chaired by the Netherlands. In the United States, replicating efforts such as the Declaration for the Future of the Internet will prove difficult during an election year.

Antitrust: A transformational year for US antitrust

Two major antitrust cases will consider whether Google’s search engine and advertising technology market constitute unlawful monopolies. Striking at the heart of Google’s business model, the outcomes could have broad reverberations across the technology industry, affecting issues such as distribution deals and growth tactics. Meanwhile, the FTC and Meta will square off on the question of whether Meta unlawfully suppressed competition in its acquisitions of Instagram and WhatsApp.

In the EU, designated gatekeepers will be required to comply with the Digital Markets Act by March 6. These companies will have to deliver reports on their measures to ensure compliance and present a customer profiling methods audit.

Online platforms: New regulations, old problems

The EU’s Digital Services Act will enter into force by February 17. While very large online platforms and search engines have been required to comply since August 2023, this year will present significant new transparency and accountability requirements for most online platforms.

In the United States, key developments on platforms may come from the courts. A pair of Supreme Court cases challenging Texas and Florida content moderation laws will be decided by June. The laws would curtail social media companies’ ability to remove and curate content.