From the Ashes of the “Empires”: Towards Global Convergence in Approaches to Data Governance?

[Alexandros Bakos is a Postdoctoral Fellow (Industrial Policy and Digital Development Project) at the College of Law, Hamad Bin Khalifa University.

Amna Zaman is a S.J.D. Candidate and Fellow at the Industrial Policy and Digital Development Project, College of Law, Hamad Bin Khalifa University.

Georgios Dimitropoulos is a Professor of Law and Associate Dean for Research at the College of Law, Hamad Bin Khalifa University.]

Introduction

In her book, Digital Empires, Anu Bradford discusses how the three global digital powers, the United States (US), China, and the European Union (EU), pursue different approaches to governing and regulating the digital economy. The US arguably adopts a market-oriented approach, built on nurturing and promoting the rise of tech giants (even if this is done at the behest of individual rights) (pp. 33-40). The hands-off approach is predicated on the understanding that the market is best equipped to regulate itself, with minimal government intervention. 

China follows a state-driven model, seeking to reinforce its data sovereignty and to attain (domestic) tech dominance (pp. 69-72). China’s regulatory approach is characterized by a strong emphasis on state control and oversight, with the government playing a significant role in shaping the direction of the digital economy. This approach has been successful in many areas, including the development of China’s e-commerce and fintech sectors. 

Europe, meanwhile, pursues a rights-driven regulatory model, focused on the protection of human rights and ensuring a fair distribution of the digital economy’s benefits (pp. 105-10). 

The concept of “empire” is used to differentiate between the three models. Conceptually, this separates Bradford’s approach to the those of earlier commentators, who have referred to “data realms” or “the four internets” (stemming from an – initial – view of the internet as an open domain, based on transparency and interoperability), for instance. Ultimately, Bradford argues that these three imperial models are likely to dissipate into a bipolar global order, pitting techno-autocracies (led by the Chinese model) against techno-democracies (centered around a US-EU-led coalition) (pp. 388-93). 

While we share Bradford’s view of a possible convergence, we believe that this convergence will manifest itself differently. It will be messier and will not involve a coalition led by the US and the EU. There will be certain similarities in approaches, but likely no harmonisation between goals and each power’s agenda. In other words, this convergence will not completely separate China from the EU and US in terms of governance approaches. It will separate the three in terms of their goals, the ensuing framework resembling more of a competitive field (with occasional convergences) than the bipolar world Bradford referred to. 

A significant example is the shift in Washington’s approach to data localization. The US has previously labeled data localization laws as “hurdles to trade”; but lately, a change in the country’s stance has been observed as part of its broader industrial strategy. In October 2023, the United States Trade Representative (USTR) announced a reconsideration of its stance on free data flows and source code, signaling a shift from its previous support for prohibiting restrictions on such domestic requirements in international agreements, including the Joint Statement Initiative on e-commerce at the WTO. The justification reads as follows: “In order to provide enough policy space for those debates to unfold, the United States has removed its support for proposals that might prejudice or hinder those domestic policy considerations”. The US government – alongside several other participants in the JSI e-commerce negotiations – also raised concerns about the stabilized text of the Agreement on Electronic Commerce of 26 July 2024, which the government eventually chose not to sign.

This approach is not radically different from the one that has been most recently adopted by China. China has traditionally adopted a regulatory framework that maximizes control over data flows for national security purposes. Nonetheless, China has relaxed its approach to cross-border data flows (CBDFs) for domestic businesses with overseas activity, exempting them from, among others, data export security assessments, if certain conditions are met (including the absence of domestic personal data).  This appears to be driven by the competition between Chinese and US tech companies in the global digital marketplace. This development reinforces the convergence argument.

Even the EU, while theoretically enabling CBDFs to ensure the competitiveness of its companies, conditions this on the adequacy of data protection regimes in the jurisdiction where the data flows. In fact, developments in the EU (especially since the late 2010s) seem to represent the ultimate catalyst to the convergence mentioned earlier. Particularly, it is Brussels’ newfound appetite for industrial strategy that will accelerate the EU’s acceptance of the importance of data sovereignty. This is the aspect to which we now turn.

There Is More Similarity in Approaches Than Immediately Apparent

In 2017, in his Sorbonne speech, France’s President Macron emphasised the importance of safeguarding European sovereignty in various areas, including the digital sphere. While referring to the importance of protecting individual freedoms and privacy, he also discussed the importance of ensuring that the market on which companies operate is “fair” and their economic data is safeguarded. At the European Union level, this approach is reflected in the open strategic autonomy doctrine. It essentially allows the EU to act autonomously, by reducing its vulnerabilities to external powers and developments, especially in strategically important areas of the economy (p. 15). On the one hand, open strategic autonomy ultimately allows the Union to observe its values (especially democracy and human rights centeredness). On the other, the doctrine is a reflection of the Union’s geopolitical awareness and is premised on a territorially based understanding of great power competition (pp. 14-5). 

The open strategic autonomy concept has also percolated through the digital governance sphere. For instance, one cannot overemphasise the urgency of ensuring access to critical raw materials, essential for the digital transition (p. 43). But even regarding the governance of the actual digital products, services, and infrastructure, there is a clear geopolitical awakening in Europe. Just like ensuring respect for fundamental rights and democratic values, digital and technological sovereignty have become main areas of political concern. This new geopolitical awakening, together with a newfound appetite for industrial policy (particularly for digital development, which includes the development of data spaces), have turned the EU into a bloc seeking its own technological innovation capabilities and ensuring funding for critical technologies that span both the civil and military domain (p. 396). Furthermore, the EU’s data strategy now expressly envisions an open, but “assertive approach to international data flows”. This arguably integrates CBDFs into the broader strategic autonomy doctrine (ultimately, a tool for reinforcing the EU’s sovereignty over its data). Currently, reality is far from the ideal scenario painted by different policy positions: there are hardly any EU ‘digital companies’ among the top 20 by market capitalization.

These developments point towards convergence in approaches to digital governance, particularly CBDFs, spurred especially by the need to achieve, and maintain, competitiveness and autonomy in the digital sphere. Increasingly, we see a strategic direction determined by geopolitical developments.  A good part of this converges into the development of forward-looking industrial strategies.

Outward-Oriented Industrial Policies Perfectly Reflect the New Dynamics  

In a borderless digital world, any industrial strategy that reinforces a state’s sovereignty needs to reflect awareness of the global digital framework. Complete isolation, as Bradford also admits, is impossible because the three powers also depend on each other (Bradford, p. 16). 

There is a rebirth of outward-looking industrial policies all over the world, including the US. Domestic outward-looking industrial strategies are increasingly giving rise to a new international (economic) law (pp. 50 and 94-109). We see this especially with Washington’s engagement in plurilateral initiatives such as the Indo-Pacific European Framework for Prosperity (IPEF), the Americas Partnership for Economic Prosperity (APEP) and the India-Middle East-Europe Economic Corridor (IMEC). They paint a picture of selective engagement, on a more granular and modular basis. One that ultimately does not discard the choice element and reassures those who fear that sovereignty is slipping. All three new frameworks place a great emphasis on digital technologies and digital infrastructure development. 

The recent Draghi report in the EU, highly influential in the new Commission’s policy and strategy direction, also seems to reinforce the EU’s open strategic autonomy push. If anything, the EU would be pushing towards more autonomy and independence from the US, and it’s hard to see how convergence to the point of creating a single pole of power is possible. Even initiatives such as the EU-US Trade and Technology Council (TTC) seem to be premised on the selective, granular approach mentioned earlier. In fact, it is curious how, on the main official webpages that present the TTC, the EU calls the US a “partner”, while the US only refers to the two parties cooperating  “on the development and deployment of digital technologies”.

There are structural constraints to a complete decoupling and to any of the three regimes becoming dominant. A form of polarization, pitting digital democracies against digital autocracies seems unlikely because of the ensuing dynamics. The three major powers are aware of this form of interdependence, yet they want to safeguard their sovereignty. The convergence in approaches ultimately results from these tensions, which in turn create incentives – and perhaps even a structural necessity – for selective engagement. 

Nonetheless, convergence in approaches does not mean convergence in goals, especially in a geopolitically and geoeconomically awakened world. This makes it difficult for any two of the three to gravitate towards each other to such an extent that a coalition is formed. Patrick Leblond has also cautioned against assuming convergence between the US and the EU to the point of creating a bipolar world. 

Against this background, using the concept of “empire” as a symbol for the policy and strategy developments of the three major powers, can instill a feeling of uneasiness. An empire, by definition, seeks expansion. While expanding, it is constantly changing. But the more one moves towards its center, or core, the more resistance to change they might encounter (p. 6). This does not necessarily mean that the center of an empire is hermetically sealed from outside influence. Its stability and resistance to change are undeniable, however. This understanding does not reflect the strategies and the policy directions of the three powers, which, Bradford admits, can be heavily influenced by developments from the other two “empires” (the “models frequently collide in the international domain, leading to fierce battles both within and across the digital empires”; p. 11). Those changes can affect the core of digital policies and strategies of the three powers. They can fundamentally alter their approaches to digital governance. 

At the same time, certain things will not change overnight. The EU, irrespective of how much its strategic autonomy doctrine pushes it towards a more sovereigntist approach to data and broader digital governance, will still maintain its rights-first approach. Similarly, China will not suddenly become a jurisdiction through which data can flow freely, even if, as shown earlier, a certain relaxation of the strict requirements for CBDFs has taken place. The US will not suddenly become less keen on achieving digital primacy through its tech giants, even if national security considerations and its industrial strategy have also led Washington towards decreasing its support for unencumbered CBDFs. 

What Does This Tell Us About the Future of (An) International (Economic) Law (of Digital Technologies)?

We somewhat teased our answer earlier when we were discussing the US’s approach to engaging in global frameworks that have ordering effects when it comes to the digital economy. Its choice to enter new plurilateral framework initiatives, such as the IPEF, is reflective of what is likely to follow. Such approaches permit a granular and modular engagement with various areas that were traditionally regulated through hard international law instruments. 

There seems to be less of a focus on binding instruments, especially treaties that are comprehensive and include overarching digital trade chapters (for instance, mega-regionals such as the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership). Flexibility and unilateralism will likely underpin any approach. States will maintain themselves within global economic frameworks but will insist on (regaining) their sovereignty. 

Yet, the newfound appetite for industrial policy that one sees with the US and the EU, coupled with China maintaining its sovereigntist approach, but relaxing its strict requirements on data localization, paint a paradoxically optimistic picture. The reassertion of sovereignty does not mean that the three major powers will isolate themselves. They will remain engaged in international structures, albeit in a more flexible manner. Coupled with the convergence in approaches to digital governance (particularly CBDFs), there is scope for less friction. As seen with examples such as the EU-US TTC, granular cooperation can, and indeed, does ensue. Whether this structural development, however, is enough to reduce friction with China remains to be seen. 

This research was supported by the Industrial Policy for Digital Development (IPDD) Project (ARG01-0524-230314), funded by the Qatar National Research Fund (QNRF).