In the early 2000s, a handful of U.S. tech companies grew exponentially to become some of the most successful enterprises in history. At the time, these companies benefited from limited regulations, sparse international competition, and an abundance of investment capital. Nearly two decades later, the global landscape has shifted dramatically. Today, the convergence of the widespread digitalization of society, a renewed era of great power competition, and threats from state and non-state actors are making technology policy a critical component of both national security and economic prosperity.

Regulation is increasingly becoming a tool used by governments around the world to advance national innovation agendas, with an increasing number of countries enacting broad regulatory regimes restricting the free flow of data across borders. Both China and the EU are using new laws to bolster domestic technology companies and have enacted restrictions that hinder U.S. companies’ ability to compete within those jurisdictions. They are simultaneously pursuing robust industrial strategies to gain an advantage in developing next-generation technologies. While the EU’s tech sector is still developing, China has numerous established tech companies—many of which are directly backed by the state—poised to challenge U.S. leadership in the sector. International challengers are emerging from new tech hubs such as Tel Aviv and Singapore.

To maintain competitiveness and safeguard national security, U.S. legislators have a vital role in crafting a regulatory regime that preserves technology leadership, drives innovation, establishes strong data protection and cybersecurity protocols, and counters mis- and disinformation and foreign influence. However, progress to date has been slow and piecemeal. The U.S. is one of the only developed countries without a comprehensive data privacy law, and it lacks a clearly defined industrial strategy to rival China or the EU.

In the coming months, Congress will consider the most significant legislation to regulate the U.S. tech sector to date. The proposed bills are far from comprehensive reforms. Instead, select provisions could limit the competitive position of a small set of major U.S. companies while leaving underlying issues with data privacy, cybersecurity, and foreign competition unaddressed. The proposed provisions, if passed in their current form, could result in a range of unintended consequences that would hinder—rather than strengthen—the global competitiveness of U.S. tech companies by overlooking broader threats to U.S. technology leadership, introducing new national security risks, and privileging foreign competitors.

This project, produced by FP Analytics with support from the Computer Communications Industry Association (CCIA), distills key provisions under consideration, analyzes the potential implications of the proposals before Congress, and convenes leading experts to discuss these pressing issues and advance our collective understanding of the ramifications of emerging technology policies. CCIA did not provide input to nor influence this analysis.

U.S. Tech Regulation and Geostrategic Competition

As currently drafted, various provisions in the tech industry regulations under consideration by the U.S. Congress could bear unintended consequences for national security by exacerbating existing vulnerabilities in the domains of data privacy, cybersecurity, and the spread of mis- and disinformation. Major technology platforms face existing challenges in these spheres, but elements of the legislation aimed at reigning in these companies’ market power do not address fundamental concerns and presents new risks.

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The EU and China are leveraging regulation to limit the influence and reach of U.S. tech companies, limiting American innovators' ability to compete within their borders. Provisions in pending legislation would place further limits on these companies, potentially undermining their ability to compete in three of the world’s largest markets.

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