The rapid expansion of data centers has created new political challenges. Governments want to build more data centers to reap the benefits from the artificial intelligence (AI) economy and achieve their digital sovereignty agendas. However, data centers require enormous amounts of electricity and water, threaten emission-reduction targets, and often raise local electricity prices. As a result, local communities increasingly mobilize against data center construction. We use a vignette and conjoint survey experiment in Germany to evaluate how publics think about the environmental, economic, and (geo)political tradeoffs that data centers entail. We find that directly priming people with digital sovereignty concerns only marginally increases support for building more data centers. Yet, support varies substantially based on characteristics that people do have strong views about: decarbonization, geopolitics, and local environmental and economic impact. Geopolitical concerns are particularly salient: people strongly favor data centers operated by German or European firms over US or Chinese operators. These nationality effects are large even when compared to the effects of electricity price increases and variation in energy sources. Our findings suggest that public opposition to data centers depends on pre-existing political cleavages and that sovereignty concerns loom large.

The EU and the US have emerged as central actors in the governance of the digital economy. Existing scholarship tends to view their digital governance models as distinctive approaches, with the EU advancing a rights-based model and the US favoring a market-based approach. Yet, such arguments mask the underlying interdependencies that shape digital policymaking on both sides of the Atlantic. In this paper, we show how the digital market governance strategies of the EU and the US were shaped through the constant interactions of their respective attempts to unleash market competition and shield citizens from harm. By tracing the evolution of transatlantic digital governance since the 1990s, we highlight how both jurisdictions initially emphasized market making over market correction, hoping to unleash the promises of new technology. As the digital economy consolidated around a few large US-based technology companies, however, digital governance in the EU shifted toward a more protective approach. EU digital governance attempted to balance the EU’s dependence on foreign digital technology firms—and their influence on EU policymaking—with efforts to get these firms to follow EU market rules. European regulatory efforts reverberated across the Atlantic as US policymakers took up concerns related to market concentration. With the reelection of Donald Trump, digital policy is increasingly becoming intertwined with both trade and security policy on both sides of the Atlantic. The paper, then, underscores the interrelated nature of digital policy-making where markets and authority increasingly span borders.

What explains major shifts in international tax cooperation? Existing literature emphasises either the centrality of the United States for successful reform or the power of multinational corporations to exert downward pressure on global tax rates. Nonetheless, in 2021 members of the OECD Inclusive Framework (IF) agreed to tax some of the largest multinational companies based on their market activities rather than physical presence – a fundamental change to the international taxation regime that the U.S. government and U.S. multinational corporations (MNCs) had long opposed. We argue that the spread of digital value chains has exposed the activities of MNCs to greater regulatory activity, allowing governments to use unilateral regulatory action as leverage in international negotiations. By shifting the reversion point – the status quo absent an international agreement – governments were collectively able to transform an agreement. We demonstrate our argument by examining how the implementation of national digital services taxes (DSTs) affected the OECD IF negotiations. Drawing on interviews with key stakeholders and primary sources, we show that the adoption of DSTs, including in France and India, and the threat of additional proliferation of DSTs, pushed the United States to drop its longstanding opposition to parts of the IF process.

Why does the European Commission continue to sign onto unstable international data flow agreements with the United States? After two agreements were struck down by the European Court of Justice, and clear signals that a new one could meet a similar fate, the European Commission agreed to the Data Privacy Framework. To make sense of this behavior, we connect traditional work on veto points with work on historical institutionalism to highlight an international negotiation strategy – running out the clock. While traditional veto points literature suggests multiple institutions with varying preferences will limit the set of potential policies or their adoption, we highlight how these dynamics change when considering veto points in time. We showcase our argument by building three historical narratives detailing the negotiation of the successive data flow agreements. Our findings have important implications for the future of the transatlantic privacy regime as well as negotiation dynamics.