U.S. warns against IP, trade secret risks in draft EU tech rules - Reuters

• Biden Administration has sent out a letter to EU countries, European Commission, and the involved companies

• The letter warns the draft DMA and DSA could put IP and trade secrets at risk

The United States has warned that the draft landmark European Union ruling, which would require U.S. tech giants to share information with rivals, could put companies’ intellectual property and trade secrets at risk.

A document, which is circulated to EU countries, the European Commission, and involved companies, was seen by Reuters.

The paper said the law would force the companies to change their business practices and the design of their software which may have implications for security and consumer protection.

The backdrop

Frustrated by the slow pace of investigations, EU antitrust chief Margrethe Vestager has proposed two sets of rules to rein in Amazon.com Inc, Apple Inc, Google parent company Alphabet Inc, and Facebook parent company Meta Platforms Inc.

The Digital Markets Act (DMA) intends to ensure a higher degree of competition in the European Digital Markets by preventing large companies from abusing their market power.

The Commission sets out a list of dos and don’ts, aiming at each company’s core business model and allowing new players to enter the market, with fines of up to 10% of global turnover for non-compliance.

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The Digital Services Act (DSA) would force the tech giants to tackle illegal content on their platforms more actively and is reinforced by fines of up to 6% of global turnover.

The European Commission referred to the tech giants as ‘gatekeepers’ as these companies control a considerable amount of data and access to their platforms.

Warning from Biden administration

“DMA would require gatekeepers under certain circumstances to provide competitors with information that may be protected by intellectual property and trade secret law,” the document said, Reuters reported.

“However, the DMA does not include specific language relevant to the protection of intellectual property, including trade secrets.”

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“As a result, there is a concern that the DMA may override existing protections for intellectual property rights, including protection for trade secrets, in EU law under certain circumstances.”

“Broadly speaking, the Biden administration has been consulting with stakeholders and reviewing both the DMA and the DSA,” a U.S. government official told Reuters.

“We have also been clear that we oppose efforts specifically designed to target only U.S. companies,” the official said.

The U.S. government also warned against enforcing the law on cloud service providers, saying that these companies may be neutral transporters of data from one point to another, and the EU should reconsider the penalty amount, Reuters reported.

The document said illegal content should be defined narrowly on the DSA “to ensure it will not be a source of conflicts of law nor a benefit to member states who have shown a tendency to reduce press and association freedoms.”

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