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Be careful what you wish for. Silicon Valley’s frantic courting of Donald Trump appears to be paying off. In his first week, the US president scrapped a Biden executive order on AI safety and said that he wanted US companies to dominate the world in artificial intelligence. His backing has brought a renewed confidence, prompting US tech companies to intensify their pressure for regulatory accommodations in Brussels.
Even the fact that US tech companies are enjoying a reprieve from their habitual role as Trump’s punching bags on social media is a turn for the better — though that doesn’t mean his ire won’t swing round again with the inevitable turn of presidential whim.
But the risks of a backlash are rising. Being seen as both symbols and tools of US power at a time of rising geopolitical tensions is already having an impact.
One obvious sign of this is the way that tech companies look set to be drawn into damaging tit-for-tat battles as the new administration brandishes trade tariffs as an all-purpose weapon.
Given his closeness to the president, companies owned by Elon Musk are first in the line of fire. The Financial Times reported this week that Tesla looked set to be barred from testing its driverless car software on the streets of China as trade tensions mount. There have also been stirrings of wider action. China launched a new antitrust investigation into Alphabet and looked to increase its scrutiny of US chip companies.
The bigger risks, though, lie further ahead. In the years of US-led globalisation much of the world opened to booming US tech companies. With the international order going through wrenching change, that looks to be a thing of the past — even if, in the short term, a raw exertion of US power gives the companies a boost.
This combination of short-term advantage and longer-term risk seems nowhere more obvious than in Europe.
Even without pressure from the US, Brussels has already shown signs of rethinking its role as a regulator. The dangers of taking a regulation-led approach to tech have been highlighted by Mario Draghi, the former European Central Bank chief, whose report on lagging EU competitiveness last year still reverberates. Writing in the FT last week, Draghi said that using regulation to lessen the risks of technology, while a laudable goal, hadn’t done much to boost the wider welfare of European citizens.
In one indication of a shift, Brussels has scrapped a plan to make tech companies liable for AI mistakes — something condemned in Silicon Valley, but which also threatened to hold back Europe’s own tech start-ups.
EU regulators have also been pondering how aggressively they should apply the new Digital Markets Act against US tech giants. It is too early to say what this will lead to, but after years of being on the receiving end of billions of dollars of fines, Silicon Valley has sensed a change.
However, the transatlantic shockwaves spreading to Europe during Trump’s first weeks back in office may produce a political backlash. To their critics in Europe, tech companies aligning themselves closely with the new US administration has only confirmed long-held suspicions — that the companies are little more than digital colonists, more interested in their own power and wealth than the wellbeing of the continent’s inhabitants.
Worries about US dependence have renewed interest in the idea of a “eurostack” — a complete set of tech infrastructure controlled in Europe, from chips up to software applications.
The impact from ideas like this are likely to be very limited in the short term. There are simply no alternatives to some strategic American technologies, like AI chips, and the sheer scale of its cloud infrastructure companies and dominance of many areas of software make them irreplaceable.
The question is whether rising tensions with the US — along with the wider use of AI, creating the biggest new opportunity in tech for years — will be enough to galvanise Europe’s policymakers and tech entrepreneurs.
Previous attempts to build European versions of US-owned infrastructure — like the Quaero web search engine and Gaia-X system for federating cloud data centres — haven’t come to much. As DeepSeek’s groundbreaking moves in AI have shown, though, AI can be wide open to disruption.
For Silicon Valley, being identified too closely with a president who is causing the world to recoil from US power has clear risks. But given their need for his approval, they may have no choice.
richard.waters@ft.com
