The global corporate leaderboard continues to showcase American innovation in tech. 80 percent of the world’s 25 largest companies are now based in the US, highlighting the strength of American innovation, capital, and scale. Europe, by contrast, barely appears—Dutch chip-equipment maker ASML is the only European company on the list, sitting at number 25.

While Europe’s global corporate influence diminishes, it has found another way to extract value by imposing increasingly opaque regulatory demands on US innovators. Measures such as the Digital Markets Act (DMA) and Digital Services Act (DSA) have become tools not just for governance, but also for revenue generation and strategic leverage, targeting US technology companies that drive a significant portion of the global digital economy.

This imbalance between regulatory assertiveness and competitive dynamism raises a troubling question: Is Europe helping to shape the digital future or just taxing those who do?

European regulators claim to promote competition, yet the European Union (EU) is imposing hefty fines on major US technology companies via broad digital regulations. They’ve established a regulatory system that unfairly targets American companies, jeopardizes national security, and hampers American innovation through excessive regulatory mandates and hefty daily fines for noncompliance.

For context, the DMA took effect in November 2022 to promote competition in European digital markets. However, nearly three years later, the reality is different. The compliance costs for US technology companies are estimated at $200 million annually and the annual expenses for the five targeted US tech giants may exceed $1 billion. Since the DMA’s implementation, five American tech firms have been labeled as “gatekeepers,” forcing them to alter their business models to meet Brussels’ requirements. The DMA has imposed over $800 million in fines on Apple and Meta combined; this is more than what Meta plans to spend on an American AI data center in Alabama, which is expected to create 100 American jobs.

Instead of creating jobs through tech innovation, these companies are paying huge fines to foreign governments that lack their own innovation strategies. So far, the biggest penalties have been imposed under the DMA, while the Digital Services Act (DSA), the Data Act, and the EU AI Act are still in early stages of rollout—fines are expected soon.

But the financial burden is only the beginning of the DMA’s harm. The DMA’s mandatory interoperability rules weaken security by forcing platforms to open their tightly integrated ecosystems, creating risks such as Direct Memory Access attacks that could expose encryption keys and personal data. By requiring companies to share proprietary technologies with third-party developers, the regulation erodes competitive advantages gained through research and development (R&D), leading to a race to the bottom where copying existing features becomes more appealing than innovation.

The European Commission has recently sought feedback from stakeholders on the effectiveness, impacts, and future challenges of the DMA. Apple and Google both responded strongly, calling for significant reforms to the DMA. Apple’s submission explicitly requested a repeal of the DMA or, at the very least, a complete rewrite as its top priority. Google emphasized the importance of avoiding rules that would unfairly penalize non-EU companies through strict, one-size-fits-all obligations.  

The Digital Markets Act sets a troubling global precedent. By turning regulation into a way to generate revenue, foreign governments are creating fine-based systems that profit directly from the success of American technology companies. This approach acts as a de facto tax on US innovation abroad, enabling other countries to extract financial gains from the firms responsible for global digital growth. Instead of encouraging fair competition or benefiting consumers, these regulatory models prioritize government income over innovation outcomes. If this model spreads, it will lead to a fragmented and punitive worldwide framework that penalizes American leadership in technology and hampers long-term investment in the digital economy.

Other governments are following the DMA’s lead by imposing hefty, punitive fines on American firms, such as Japan’s Smartphone Law. If this precedent is established, the spread of EU-style regulations could trap US innovators in a never-ending cycle of compliance costs instead of boosting competition. The US government cannot afford to be a passive observer. 

Finding the right transatlantic balance requires regulations that protect consumers while encouraging innovation. The United States and Europe share core values regarding privacy, competition, and accountability, but they differ in their approaches to achieving these values. The EU’s approach often sees American innovation as an issue to control rather than an opportunity to collaborate on—emphasizing enforcement over partnership. A more effective strategy would focus on regulatory reciprocity, cross-border R&D incentives, and clear standards for compliance that build trust and create opportunities. If the goal is to create a dynamic, secure, and competitive digital market worldwide, we must recognize that innovation—rather than regulation—ultimately strengthens democracy and fosters prosperity.