The tech sector spends a hefty sum lobbying the EU. Here’s why

Big tech companies spend more than €97 million annually lobbying the European Union.
16 September 2021 | 2 Shares

Why does the tech sector spend a hefty amount lobbying the EU? (Photo by Kenzo TRIBOUILLARD / AFP) (Photo by KENZO TRIBOUILLARD/AFP via Getty Images)

  • Firms’ lobbying efforts in the EU show the tech sector spends more than any other in trying to influence policies and legislation on the continent
  • A dozen of companies including Vodafone, Qualcomm, Intel, IBM, Amazon, Huawei, Apple, Microsoft, Facebook, and Google are responsible for almost a third of the total tech lobby spend
  • Most of the sector’s lobbying activity is focused around the EU’s planned digital economy regulations

Just as the European Union tries to rein in the most problematic aspects of Big Tech – from disinformation, targeted advertising to excessive market power – the digital giants are lobbying hard to shape new regulations. In fact, the digital industry now has more lobbying power than pharmaceutical, fossil fuels, financial, or chemical sectors, spending annually over €97 million to influence the decision-making of the EU.

In a recent 48-page report titled The Lobby network: Big Tech’s web of influence in the EU,  Corporate Europe Observatory and LobbyControl profile the lobbying power of the tech sector, mapping 612 companies, groups and business associations and how their combined efforts are attempting to shape the bloc’s policies towards them.

What is more shocking is that only 10 companies — which collectively spend more than €32m to get their voices heard in the EU — are responsible for almost a third of the total tech lobby expenditure. Google, Facebook, and Microsoft as listed as the top spenders, with a budget of over €5 million each.

“Although the combined lobbying power of the whole sector is very high, lobby expenses vary greatly from €5,000 to €5,750,000. Aside from the notable big spenders, most companies’ lobby budgets are at the lower end of this range: 75% have a budget lower than €200,000. Of this 75%, the bottom 25% spend less than €5,000,” the report said, adding there is also a geographical imbalance between which companies are spending the most.

TOP 10 LOBBY SPENDERS OF THE DIGITAL INDUSTRY

Top 10 tech lobby spenders. Source: Report

“Out of all the companies lobbying the EU on digital policy, 20% are US-based, though this number is likely even higher. Less than 1% have head offices in China or Hong Kong. This implies Chinese firms have so far not invested in EU lobbying quite as heavily as their US counterparts.”

To top it off, the digital industry employs 1452 lobbyists on its behalf. The vast firepower indicates that the industry sees a lot at stake in the current policy discussions, and it is notable that the tech firms are outspending all other sectors in terms of lobbying.  

At the upper end, the report showed that the top ten invest at least €1 million each on lobbying. There are only six companies that spend in excess of €2 million. Meanwhile, Google, Facebook, and Microsoft stand out with a lobby budget of more than €5 million each. When comparing corporate lobby spending across sectors, Google, Facebook, and Microsoft remain the top spenders in Brussels. Apple ranks 6th, following Bayer and Shell, 16th whereas Amazon ranks 15th. US tech giants are not only outspending other digital industry players, they are outspending all players.

Why are tech giants lobbying the EU so hard?

The report highlighted that the aim of Big Tech and its intermediaries is to make sure there are as few hard regulations as possible – for example, those that tackle issues around privacy, disinformation, and market distortion – to preserve their profit margins and business models.

TOP 15 ACTORS LOBBYING ON THE DMA/DSA

Source: Report

If new rules can’t be blocked, then the aim is to at least water them down. “In recent years these firms started embracing regulation in public, yet continue pushing back against behind closed doors. There are some differences between what different tech firms want in terms of EU policy, but the desire to remain ‘unburdened’ by urgently needed regulations is shared by most of the large platforms,” the report added.

The report further noted that most of the tech sector’s lobbying activity is focused around the EU’s planned digital economy regulations; namely the Digital Services (DSA) and Digital Markets (DMA) Acts, which both aim to curb the overarching power of increasingly dominant technology giants that operate in digital markets.

“More than 270 meetings on these proposals have taken place, 75% of them with industry lobbyists. Most of them targeted Commissioners Vestager and Breton who are responsible for the new rules. This lobby battle has now moved to the European Parliament and Council. In spite of the lack of transparency, we start seeing Big Tech’s lobbying footprint in the EU capitals,” the report continued.

What are the gains in store?

Big Tech is trying to convince us that their concerns about regulation are not about themselves but about protecting the interests of SMEs and consumers. “Big Tech companies portray themselves as generous, hide their real interests, and emphasize the potential negative impact of regulation on SMEs and consumers,” the report noted.

Ironically, other business sectors such as media and publishing, smaller e-commerce, and the hospitality industry, are calling for strong rules both in the DSA and the DMA, as they are concerned over the risks of being pushed aside by the market power of digital platforms. 

Finally, Big Tech’s toolbox of useful arguments also exploits the fear of China and Chinese corporations. The warning, per the Lobby report, is that too much regulation will cause Europe to fall behind the US and, above all, China. The narrative goes along the lines that either Europe wins the tech race against China, or it falls back into the Stone Age.

The report concluded by indicating that the alarming power of the digital sector should be a wake-up call to put in place stricter lobby regulation both at the EU and member state levels.  It is also necessary to make sure new instruments are created to limit the power of corporations that otherwise will use it to shape legislation according to their interests.