How Do Multinational Companies Manage Their Relations with Governments?

After two decades of unchecked growth, major technology companies are now facing increased attempts at legal and governmental control, especially in the United States and the European Union. This comes as the political, social, and informational roles of these platforms have become clear, potentially threatening some national and national interests.

This is occurring at a time when political and legal disputes are escalating between several governments and major multinational tech companies, due to their political stances or for regulatory and legal reasons such as law enforcement, intellectual property protection, taxes, and antitrust policies. Therefore, it is important to highlight the key disputes between multinational companies and governments, the underlying reasons for these conflicts, and their consequences.

Multiple Issues:

Several cases, laws, regulations, and practices indicate a state of confrontation between countries and major companies, as follows:

• On August 5th, the District Court of Columbia in the United States issued a ruling that Google violated Section 2 of the Sherman Act, ruling that it illegally maintained a monopoly over internet search and text search advertising. District Court Judge Amit Mehta, in his expanded ruling, noted that Google controls about 90% of the internet search market and 95% of the mobile search market. Meanwhile, its competitor Microsoft Bing, the second search engine on the list, has a share of no more than 6%.
• In March, the US Department of Justice and a group of state attorneys general filed a comprehensive antitrust lawsuit against Apple, accusing the $2.6 trillion company of violating antitrust laws by controlling the iPhone and raising costs for consumers, developers, artists, and others.
• In May, the European Commission conducted an investigation into whether Google violated the Digital Markets Act, a new law aimed at preventing any single platform from gaining too much control over the online landscape.
• The European Union began enforcing the new comprehensive digital antitrust law on March 7th, immediately targeting Google, Apple, and Meta for investigation. At the same time, the European Commission fined Apple about $2 billion for preventing its competitors in the music streaming field from offering cheaper deals outside of its apps.
• The Federal Trade Commission (FTC) accuses Amazon of illegally inflating the cost of goods sold on its platform. A lawsuit was also filed to force Meta to sell Instagram and WhatsApp. All these investigations began during the Trump administration.
• Some major social media apps, like Meta’s products, have faced restrictions in some countries due to their stances on government discourse in the context of ongoing conflicts. The Israeli escalation in the Middle East angered many governments after Meta’s products handled content supporting Palestine and Gaza negatively. This conflict intensified when Meta deleted or hid content from some government officials related to the mourning of Hamas leader Ismail Haniyeh, which angered countries like Malaysia and Turkey, leading them to suspend and ban Instagram for several days.
• Efforts to limit the roles of digital companies and platforms were not confined to American and Western platforms. Many countries sought to ban the giant TikTok app due to its ties with China or due to the social and propaganda impacts of the app. Among the countries that sought to ban the app are Afghanistan, Armenia, Australia, Austria, Azerbaijan, Belgium, Canada, Bangladesh, Denmark, the European Union, Estonia, France, Indonesia, Ireland, and others.

Complex Motives:

The previous developments and practices point to a range of motives and reasons behind the disputes between governments and major tech companies, including the following:

• Changing Nature of the Relationship: The relationship between multinational companies and governments has shifted from being a main partnership in development planning, resource mobilization, investment, consultation, and cooperation to legal and political conflict in many cases. This is due to the increasing power of these companies, which may surpass the budgets of some countries, as well as the monopolistic policies of some of these companies, imposing high fees on consumers, and their growing political and social influence. Additionally, there is concern over the influential roles of these companies during elections, shaping public opinion and different identities, and accusations of some companies being involved in various domestic and foreign conflicts.
• Disruption of Power Balance: Government concerns are growing over the increasing influence of major tech companies, which possess vast resources allowing them to redefine communication, commerce, and even culture, potentially affecting national security as they achieve transformative breakthroughs in artificial intelligence. These could impact people and organizations worldwide, allowing these companies to shape the economic, cultural, and social environment, which could shift the balance of power between government authority and the power and influence of these companies in favor of the latter, potentially affecting the sovereignty and stability of the state.
• Transformation in Areas of Convergence and Divergence: Despite the growing political and legal disputes between governments and major tech companies, there remain many areas of convergence between them. Governments still urgently need the roles of companies in the economic, commercial, and investment fields to achieve national development goals and meet citizens’ needs. As some investment and commercial roles have become a heavy burden on national government expenditures, the areas of convergence between the two parties remain intact and cannot be dispensed with. This means that the ongoing disputes are an attempt to limit the influence of these companies rather than eliminate them or integrate them into government activity.

Governments aim through enacting various legislations and managing disputes with multinational companies to reach settlements or new rules that maintain their social and economic balance and influence. They also seek to curb rising prices and the monopolistic policies of these companies. Increasing monopolies could give these companies the power to intervene in decision-making in the future, forming interest groups with sufficient influence. Such interventions could spark public anger against governments, especially as these companies impose high fees on consumers.

Impact on Privacy and Data Security Issues:

Multinational companies operating across several countries have become an increasing target of government oversight due to concerns over the misuse of personal data and the mismanagement of sensitive information. Conversely, companies strive to maintain their ability to freely collect and analyze data to support innovation and economic growth. These tensions lead to a range of legal and regulatory challenges reflecting the divergence of interests between protecting individuals’ rights and ensuring business sustainability.

Increasing Possibilities:

Relations between governments and multinational companies are witnessing a unique phase of transformation amidst rapid economic and technological developments, especially as multinational companies play an increasing role in the global and national economy. The future of these relationships appears complex and challenging. These disputes embody the conflict between global economic needs and national interests. Overall, disputes between governments and multinational companies range from regulatory and tax issues to privacy and data security matters, and political stances. With growing global pressures related to sustainability, human rights, and new technologies, the following is expected:

• These disputes will likely continue to escalate as countries develop their legislative and regulatory environment to curb the influence and power of these companies, possibly driven by leaps in artificial intelligence, which brings further concerns for governments.
• Countries and governments are expected to work on finding a regional or international legal framework to mitigate the risks to data security and privacy.
• Multinational companies are likely to work on reducing disputes with governments and attempting to adapt to the government legislative, regulatory, and oversight environment, trying to build an understanding with national authorities.
• It is unlikely that the dispute between the two parties will turn into a power or influence conflict in the near future, although the political roles and aspirations of these companies’ owners may gradually increase to pressure governments to ease the conflict. This is evident from the growing involvement of Elon Musk in making politically significant statements in various situations and events.

In conclusion, the conflict between governments and multinational companies is expected to persist and likely escalate due to the widening gap between the interests of governments and these companies. The goals and ambitions of these companies now extend beyond profitability, aiming to effect significant social, economic, and technological changes that could challenge governments’ abilities to counter them. Therefore, governments are expected to impose further restrictions on the activities of these companies, while the companies will respond with more settlements and negotiations.