Beyond the Digital Tax: The Challenges of the EU's Scramble for Technological Sovereignty

The COVID-19 pandemic has laid bare how critical digital platforms are to the functioning of our economy. Big Tech companies are likely going to emerge stronger from the COVID-19 emergency, due to the massive surge in demand for public, retail and corporate digital services. This megatrend has consolidated the dominant market position of digital multinationals – almost all of them from the US – in the EU markets, raising critical questions ranging from the EU’s ambition for technological sovereignty to the much more urgent issue of how Big Tech’s profits should be taxed. The “digital tax” issue – already the source of a lively international debate before COVID-19 – has gained in prominence as it would be an important instrument for governments in dire need of raising money to finance the post-pandemic economic recovery. With the digital tax included the Next Generation EU recovery fund presented by the European Commission, the EU is expected to further consolidate its global leadership in tech regulations. However, European regulatory activism could also raise barriers to transatlantic trade and investments, thus producing new tensions with the US.