EU’s Fine on Google Heightens Transatlantic Trade Tension
By Mejreme Asllani | 1 October 2025
Summary
The European Commission (EC) has fined Google EUR2.95b for abusing its dominant position in the advertising technology (adtech) market by favouring its own services.
The EC's decision has prompted threats of trade retaliation from US President Donald Trump. The EC’s fine could force Google to sell off parts of its adtech division and adopt strict compliance regulations, which would fundamentally alter the digital advertising market.
The fine is likely to fuel immediate US-EU trade tensions and a prolonged legal fight with Google, while also accelerating a global divergence in technology regulation that heightens risks of future disputes and creates a more complex regulatory environment for multinational tech firms.
Following its December 2023 sanctioning of platform X under the Digital Services Act (DSA), and just a month after the signing of the US-EU Trade Agreement, the EC intensified its regulatory push by taking a decisive step against another US technology giant. On 5 September 2025, the EC fined the US technology giant Google EUR2.95b (USD 3.5b) for breaching European Union (EU) antitrust rules, a decision that significantly raises the stakes in the ongoing transatlantic battle over digital regulation. The ruling is the culmination of an investigation launched in June 2021 into Google’s dominance of the adtech market.
The EC's investigation found that, since at least 2014, Google has abused its powerful position by systematically favouring its own ad exchange (AdX) and publisher ad servers with its "DoubleClick For Publishers" (DFP) service. The company also favoured the market for programmatic ad buying tools with its "Google Ads" and "DV 360" services. This self-preferencing practice, which steered advertisers and publishers towards Google’s own services, was deemed an illegal conflict of interest. The penalty is the fourth major antitrust fine that the EU has imposed on Google, bringing the company’s total liabilities in Brussels to over EUR 10b, following earlier penalties related to its Android operating system and Google Shopping service.
The response from the US was swift. President Trump condemned the fine as ‘unfair’ and ‘discriminatory’ action against a successful American company and threatened to launch a formal trade investigation that could lead to retaliatory tariffs. Moreover, Google has called the decision ‘wrong’, and it has announced its intention to appeal, arguing that its tools help European businesses and that the adtech market remains highly competitive.
The EC’s action against Google is part of the EU’s strategic ambition to act as the world's leading tech regulator, a mission driven by the goal of achieving ‘tech sovereignty’ and curbing the influence of big US tech companies. This agenda is central to the European Commission's 2024-2029 term, embodied by President Ursula von der Leyen's and new Executive Vice-President for Tech Sovereignty, Henna Virkkunen, whose focus on AI, cloud, and quantum technologies aims to close the innovation gap with the US and China. This innovation gap is particularly evident in AI technologies, where the US maintains a clear lead in developing top AI models, followed by China. In 2024, the US produced 40 AI models and attracted USD 109b in private investments, while China produced 15, leaving Europe far behind with just 3 AI models. This ambition is enforced through landmark regulations such as the DSA, Digital Markets Act (DMA), and the pioneering AI Act, all of which seek to enforce fair competition, protect consumers, and establish a human-centric digital environment. However, this assertive regulatory stance is a major point of friction in transatlantic relations, as the current US administration views these measures not as fair governance but as protectionist ‘taxes’ designed to unfairly target successful US tech companies such as Google, X, Amazon and Meta. High-ranking officials have warned that the EU's approach could stifle innovation and strategically disadvantage the West. This contrasts sharply with NATO's tech strategy, which focuses on enhancing collective defence by promoting interoperability and fostering innovation among allies to maintain a technological edge over strategic rivals. While the EU's goal of digital sovereignty and NATO's goal of technological superiority are not mutually exclusive, the EU's regulatory actions risk creating transatlantic divisions that could undermine collective defence objectives.
The EU’s fines carry significant implications that extend beyond Google. Politically, the move cements the growing ideological divide between the EU, which is asserting itself as the world's primary digital regulator, and the US, which views such actions as protectionist overreach and promotes more flexible regulations. The EU’s tech rules exemplify the ‘Brussels Effect’; by setting comprehensive regulations for its large internal market, it compels multinational firms to adopt these stringent regulations globally, thereby establishing a ‘de facto’ international standard and making EU law a global benchmark. This friction complicates efforts to build a unified transatlantic approach to AI and data governance, a key strategic goal for countering Chinese and Russian influence in the digital sphere.
Operationally, Google faces unprecedented pressure. Beyond the multibillion-euro penalty, the EC is demanding structural changes to end the company's conflict of interest. Senior EU officials have suggested that the only effective remedy may be a forced divestment of parts of Google’s lucrative adtech business, a prospect that mirrors demands made by the US Department of Justice in its own antitrust case against Google's monopoly in general search and advertising and poses an existential challenge to Google's business model.
Economically, while a tariff deal signed on 27 July 2025 by EC President von der Leyen and US President Trump has mitigated some risks, the broader threat of US tariffs continues to inject a high degree of instability into the transatlantic trade relationship, with crucial sectors like the European automotive industry, pharmaceuticals and semiconductor products potentially in the crosshairs of future US protectionism. The recent wave of US tariffs has already inflicted tangible damage by raising production costs for key sectors like steel and aluminium, while it is likely that it could disrupt transatlantic supply chains. For European companies, this volatility is the primary source of concern, as the unpredictable nature of tariff threats makes it nearly impossible to model returns on investment. Moreover, it could push many companies to redirect strategic investments and look for new potential partners. This trend is already visible in the EU's accelerated push to finalise a free trade agreement with India by the end of 2025, seeking a stable partnership amid the transatlantic turmoil. On a bilateral level, Germany is similarly intensifying its efforts to deepen trade and technology cooperation with India as a strategic counterweight.
From a security perspective, this growing regulatory fragmentation risks creating compliance gaps and may hinder vital data-sharing agreements for law enforcement and intelligence between the US and EU. Given that such data sharing is vital to the transatlantic alliance, this creates significant operational dangers. For instance, joint efforts to counter extremism and terrorism, which rely on the rapid exchange of intelligence and digital evidence, could be severely hampered as regulatory barriers prevent one ally from accessing critical data held by another, creating dangerous blind spots. This same divergence between regulatory priorities and security needs extends directly to the military domain, where the Alliance’s technological edge is challenged.
While NATO’s strategy to maintain its technological edge through initiatives like Defence Innovation Accelerator for the North Atlantic (DIANA) hinges on seamless transatlantic cooperation, the EU's market-focused regulations create direct friction with these security objectives. EU rules on data and digital sovereignty impede the vital collaboration required to fast-track new technologies, risking a fragmented defence market, slowed innovation, and new vulnerabilities for strategic competitors to exploit. The strategic alignment of other Five Eyes partners, such as the UK and Australia, remains a key variable in this evolving landscape. Recent domestic regulations, such as the UK's Digital Markets, Competition and Consumers (DMCC) Act and Australia's Online Safety Act 2021, signal moves toward stricter tech regulation, which could either align with the EU's model or create further fragmentation. Furthermore, these regulatory frictions could complicate dual-use technology trade, potentially impacting strategic initiatives like the ReArm Europe plan, which relies on streamlined transatlantic industrial cooperation, as divergent standards for technologies like AI and semiconductors could create significant barriers, slowing procurement and hindering the collective security posture of the alliance.
Robynne O/Unsplash
Forecast
Short-term (Now - 3 months)
It is highly likely that Google will appeal the fine while negotiating less severe behavioural remedies to avoid a forced sale of its adtech assets, sparking a prolonged and complex legal fight.
Medium-term (3-12 months)
It is highly likely that US-EU diplomatic engagement will intensify, albeit remaining confrontational. It is highly likely that discussions during this phase will raise the role of the future US-EU Trade and Technology Council (TTC), debating whether the latter will continue to facilitate negotiations or if talks will revert to the direct, high-level meetings favoured by the Trump administration.
It is likely that the US will launch a formal trade investigation into the EU's digital regulations under Section 301 of the Trade Act of 1974, creating significant market uncertainty and political tension between the US and the EU.
It is very likely that the EU, alongside key member states such as Germany and France, will pursue new trade partnerships with India and deepen ties with existing states such as Japan, Singapore, Canada, UK and South Korea.
Long-term (>1 year)
It is likely that this ruling will embolden other countries (UK, Canada, Australia) to pursue their own antitrust actions, leading to a more fractured and challenging global regulatory landscape for major technology firms.
It is likely that persistent regulatory divergence will risk creating a ‘two-speed’ technology environment within NATO. This risks hindering the development of integrated military systems, eroding the Alliance’s collective technological edge over strategic competitors.
