China’s Dangerous Digital Agenda

WASHINGTON, DC/BRUSSELS – When the Chinese e-commerce juggernaut Alibaba listed on the New York Stock Exchange late last year, it became the world's 17th largest publicly traded company overnight, with a market capitalization of $230 billion – larger than Amazon, eBay, or Facebook. Europe, however, seems to have missed the news.

Indeed, instead of responding to China's digital rise, the European Union has remained fixated on the global success of American platforms like Amazon, Facebook, and Google, even threatening punitive actions against them. A couple of months after Alibaba's IPO, the European Parliament passed a non-binding resolution to prevent online companies like Google from “abusing" their market position. The resolution called for “unbundling search engines from other commercial services."

But there is mounting evidence that the real competitive challenge for Europe will come from the East, especially China, which is taking a protectionist and expansionist approach to securing its future digital dominance. If the European Union and the United States do not collaborate to limit China on this front, they risk leaving the playing field wide open to a regulatory regime based on principles that directly controvert the fundamental values the West's two largest economies share.

There is no doubting China's success in the Internet economy. With Alibaba, China has 27 so-called unicorns (companies that are valued at $1 billion following an IPO, sale, or publicly declared round of funding), whereas Europe has only 21. China also boasts four of the world's top ten most visited websites. Baidu, the country's leading search engine, anticipates that half of its revenues will come from outside of China within just six years.