Will Tech Regulations Curb Poland’s Technological Progress?

Will Tech Regulations Curb Poland’s Technological Progress?

Poland has been strengthening partnerships with large American tech companies to facilitate cloud adoption in the past few years. However, simultaneously, Polish authorities have been following Brussel’s lead in regulating tech giants and working on adopting proposals intended to curb their market power. Taking the EU’s tech regulation proposals a step further, the Polish government also proposed a bill intended to prevent social media platforms from blocking or deleting certain posts. Stringent tech regulations might create an unfavorable business environment for tech companies who have been expanding their operations in Poland, and may stifle technological innovation.

Poland and Central & Eastern Europe (CEE) have recently been gaining attention from large tech companies that have been expanding their digital services in the region. For example, IBM expanded cloud capabilities in CEE and launched a new IBM Cloud location in Poland. Microsoft also announced a $1 billion investment to open a new Microsoft datacenter region in Poland and accelerate the country’s digital transformation. Moreover, Google announced a strategic partnership with Poland’s Domestic Cloud Provider in 2019 and opened a new Google Cloud region in Warsaw in 2021. Beyond providing cloud services, Google intends to help small and medium Polish businesses get smarter about data and get access to experts in cloud technologies.

National Regulations

Although the Polish authorities partner with big tech companies to expand cloud capabilities, they believe in the need of regulating them. To achieve this goal, Warsaw works with the EU authorities on proposals such as the Digital Services Act (DSA) and Digital Markets Act (DMA). If adopted, the DSA would ensure that tech companies such as Google, Amazon, Facebook, and Apple create a risk-free environment for its users while the DMA would curb their market power and prevent them from engaging in anti-competitive behavior. Just like other EU member states, Poland would also be enforcing regulations against big tech companies including Google, a company which is instrumental in facilitating Poland’s digital transformation.

Taking tech regulations a step further, the Polish government introduced another bill for regulating social media giants. Specifically, Polish Justice Minister Zbiegnew Ziobro announced the “freedom of speech protection” bill which intends to prevent social media platforms like Facebook and Twitter from blocking or deleting posts. According to Minister Ziobro, social media platforms tend to remove posts that express different views and refer to values that are unacceptable to them. Under this bill, users will be able to complain to social media companies about deleted posts and if they fail to respond, companies might be fined up to $13.4 million. The “freedom of speech” bill reflects Poland’s recent strategy of “breaking up the monopolies of tech giants”, according to Prime Minister Mateusz Morawiecki.

Unpopular Move?

Poland’s national tech regulations coupled with the EU-wide DMA and DSA could create unfavorable conditions for big tech companies like Google who have been successfully expanding digital services in the country. Google has already spoken against the DMA, claiming that some of Google Maps services will be dropped if the proposal is enacted. Google’s vice president of government affairs Karan Bhatia stated that the company is concerned that the proposals “appear to specifically target a handful of companies and make it harder to develop new products to support small businesses in Europe”.

Further to this point, DigitalEurope, a trade association including Facebook and Google, stated that the DSA is acceptable while the DMA could become problematic for Google, Facebook, and other large tech companies because they might be required to give access to data to smaller businesses. Agreeing that the regulations might affect the EU’s business environment negatively, Atlantic Council’s distinguished fellow Fran Burwell states that whether the DSA and DMA together will create “an environment in which new platforms can flourish is not clear”.

The Risk

Thus, the combination of DSA, DMA, and Poland’s national social media laws might create high regulatory risk for big tech companies and discourage them from further expansion of services in Europe, even if the proposals do not target all of their current services. This could have negative consequences for Poland and the CEE region because partnership with big tech companies is essential for accelerating the region’s digital transformation.

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