Economic cost of new EU tech rules could top $100.5 billion, study says

BRUSSELS (Reuters) - The European Union’s plan to rein in U.S. tech giants with new rules could cost the 27-country bloc as much as 85 billion euros ($100.5 billion) in economic growth, Brussels-based think tank ECIPE warned.

FILE PHOTO: The logos of Amazon, Apple, Facebook and Google in a combination photo from Reuters files./File Photo

Under the proposed rules, Facebook FB.O, Alphabet GOOGL.O unit Google, Amazon AMZN.O and Apple AAPL.O could be forced to share data and banned from favouring their own services.

In a study sponsored by Google, due to be published this week and seen by Reuters, the European Centre for International Political Economy (ECIPE) said changing the regulatory approach could have a chilling effect on the EU economy.

“The economic impacts of shifting from ex-post to ex-ante in the online services sector as stipulated by the proposals of the Digital Services Act is to a loss of about 85 billion euros in gross domestic product and 101 billion euros in lost consumer welfare based on a baseline value of 2018,” the think tank said.

“Also, it will reduce the labour force by 0.9%.” The figure of 85 billion euros is equivalent to 0.5% of the bloc’s GDP.

ECIPE said it looked into ex ante regulations of general-purpose technology, in particular the telecoms industry, and then replicated the results for online platforms to come up with the figures.

The study cited the risks of ex ante regulations where companies are told what to do before any competitive harm or market failure is proven.

“Ex ante approaches are poorly fitted for sectors that are rapidly evolving or to regulate low-risk general-purpose technologies,” it said.

ECIPE said the EU legislative framework was not designed for rapid adjustments of rules nor was it clear what market failures the bloc wants to address with new rules or that these could not be resolved once harm is proven.

The European Commission will publish the rules on Dec. 2, after which it will need to be reconciled with proposals from EU countries and the European Parliament before they become legislation.

Reporting by Foo Yun Chee; editing by Emelia Sithole-Matarise