Tech giants vs governments: Who controls the digital economy?

You wake up to a phone update. Overnight, a setting has moved, a button has changed, and a new prompt asks you to “agree” to something you didn’t ask for. Your favourite app still works, but a small shop you follow says their reach has halved. A creator you support says their payout is down. Nothing feels dramatic, yet money and attention start flowing in new directions.

That’s the tension at the heart of the digital economy. Platforms set many of the day-to-day rules for trade online, while governments claim the right to protect people and markets. By “digital economy”, think: online shopping, ads, app stores, payments, cloud services, and the data that links it all together.

By the end, you’ll understand where power sits, how it’s used, and what it means for everyday users and small firms when tech giants and governments pull in opposite directions.

Why tech giants hold so much power in the digital economy

The simplest way to see platform power is to watch what happens when you try to leave. Can you take your contacts, photos, purchase history, playlists, work logins, and followers with you, cleanly and quickly? If the answer is “sort of”, you’ve found the lock-in. The biggest firms don’t just sell products, they run the routes people and businesses depend on.

A local café might rely on maps for footfall, social feeds for attention, an app store for ordering, and a payment wallet to reduce friction at the till. That’s four points of control before the first latte is poured.

Gatekeepers: the shops, roads, and billboards of the internet

Some platforms are more like infrastructure than brands. App stores act like the only doorway to a huge group of customers. Search can be the main road, deciding which shops you pass on the way. Social feeds are the billboard space, where the price is your time and the currency is your behaviour.

This is where “network effects” show up in plain life. Your friends are there. Your group chats are there. Your customers are there. Even if a rival service is better, leaving can feel like moving house without forwarding your post.

Switching costs don’t have to be a bill. They can be hassle, lost reach, broken logins, and “sorry, we only share files through that tool”. That’s why regulators in the EU formally label certain firms as “gatekeepers” under the Digital Markets Act (DMA). The label matters because it signals something basic: some companies can tilt the market just by tweaking the rules of entry.

Data and defaults: how platforms steer choices without asking

Power isn’t always loud. It often arrives as a default you don’t notice. A pre-installed app. A “recommended” ranking. A button that’s bright for “accept” and grey for “manage settings”. A new fee tucked behind a menu change.

These nudges steer what people buy, watch, and trust, at scale. If a platform shifts a ranking signal, millions of clicks move. If it changes tracking prompts, ad prices can rise or fall. If it adjusts subscription rules, creators and small businesses feel it in cashflow.

The money flows are varied but linked: ads fund “free” services, subscriptions smooth revenue, commissions skim transactions, and payment rails take a tiny cut that adds up. The key point is that design choices shape markets. When a single interface becomes the habit for a billion people, its defaults start to look like the rules of trade.

How governments push back, and what they can actually enforce

Governments aren’t trying to run your phone. They’re trying to stop a situation where one firm can block rivals, set tolls, and rewrite terms whenever it likes. The problem is speed. Courts move slowly. Tech products change weekly.

So regulators use a mix of long legal fights and quicker rulebooks. In early 2026, the EU is pressing ahead with DMA enforcement, while the US continues major antitrust actions that can take years to resolve.

Competition rules: antitrust cases, break-ups, and forced changes

Antitrust is a plain idea: stop one company from using its power to shut out rivals. That could mean blocking competitors from key data, forcing unfair contracts, or favouring its own services in search and marketplaces.

These cases can be grinding. Investigations take time, then come hearings, appeals, and more appeals. Even when regulators “win”, the fix can be narrow: change a contract clause, open an interface, stop self-preference in ranking, or allow alternative payment options.

Break-ups exist as a threat, but they’re rare because they’re hard to design well and even harder to defend in court. A more common outcome is behavioural remedies, which means “you can keep the business, but you must change how you behave”.

For a sense of where European enforcement thinking is headed in 2026, see European antitrust trends for 2026. The message is consistent: regulators want competition that survives beyond one headline case.

Rulebooks like the EU Digital Markets Act: faster than court fights

The DMA tries a different approach. Instead of waiting for a full court battle each time, it sets clear do’s and don’ts for the biggest platforms. If you’re classed as a gatekeeper, you face duties around choice and access. In simple terms, the EU wants fewer “take it or leave it” moments.

Key expectations include:

• More user choice, such as clearer options around defaults and permissions.
• Less self-favouring, so a platform can’t quietly place its own services at the top without scrutiny.
• Fairer access for rivals, including access to certain tools or data needed to compete.
• More routes to distribute apps, which matters most for mobile ecosystems.

Full DMA enforcement began in 2024. Through 2025, regulators increased probes and penalties, and that scrutiny continues into January 2026, including checks on ad consent models and how “choice” is presented to users. Reporting and analysis around 2025 activity and what it means next is well covered in Tech Policy Press’s 2026 outlook on European antitrust and in policy discussion such as CSIS analysis of the DMA model.

One sentence that matters for the calendar: the EU will review the DMA in May 2026 to check if it’s working and whether new tech needs extra rules.

Still, enforcement has limits. Fines can change behaviour, but platforms can appeal and redesign around the edges. Governments can write rules, but they can’t ship software updates.

The grey zone: security, free speech, and national interests

If this were only about greed versus fairness, the story would be simple. It isn’t. The conflict sits inside messy trade-offs where both sides can sound reasonable, and both sides can overreach.

People want privacy, safety, and choice. They also want convenience, low prices, and services that “just work”. Those goals clash more often than we admit, and the fight over control usually happens at the seam.

Privacy and safety claims: when both sides say they’re protecting you

Governments argue that privacy rules and competition rules protect users from manipulation and lock-in. They say “consent” should be real, not a maze of pop-ups. They say young people deserve extra safety by default. They say small firms shouldn’t have to pay a toll to reach customers.

Tech firms argue that some changes can weaken security or increase scams. For example, more app-install options can mean more ways for bad actors to trick users. More data portability can mean more places for data to leak. Even well-meant rules can create new loopholes.

Then there’s the funding problem. If ad tracking is limited, ad prices can change, and some free services may push harder for subscriptions. That can be a good shift for privacy, but it can also squeeze creators and small businesses that rely on low-cost ads to find customers.

The practical truth is uncomfortable: every protection has a price, and someone will pay it, through money, time, or risk.

Geopolitics and “digital sovereignty”: who gets to set the rules

Control is also about national power. Countries want key digital services to follow local laws, store some data locally, and respect local courts. They may block certain foreign services, restrict cross-border data transfers, or use sanctions to shape who can sell chips, cloud tools, or security products.

This creates different experiences by region. The same app can behave one way in the EU, another way in the UK, and another way in the US. Consent prompts, ad targeting, app distribution, and moderation rules can all change at the border.

It’s why “who controls the digital economy” can’t have one global answer. It depends on what you’re measuring: access to users, access to data, payment flows, or the power to enforce rules.

For a grounded look at what regulators expect next year across regimes, see Digital Competition’s forecast for 2026, which tracks how competition policy is starting to shape product design, not just business deals.

So who really controls it, and what should readers watch next

Control isn’t a trophy you hold forever. It’s more like a tug-of-war rope that shifts hand by hand. Some days, platforms win by shipping a change before anyone can react. Other days, governments win by making a business model too costly to defend.

To decide who’s winning in any given moment, it helps to use a simple test.

A simple power test: money, rules, and the ability to say no

Use three questions:

Who controls the money? Look at fees, commissions, ad prices, and payment rules. If one firm can raise the toll and everyone still has to pass, it’s in charge.

Who controls access? Look at ranking, recommendations, default placement, and app approval. If one interface decides who gets seen, it has market power even without raising prices.

Who can say no and make it stick? Governments can ban, fine, or force changes, but only if they enforce. Users can boycott, but only if enough people move and stay moved. Small firms can multi-home across platforms, but only if it’s affordable.

Control shifts by sector. Cloud and chips follow different rules from social feeds. App stores differ from online ads. Geography matters too.

Signals to watch in 2026: enforcement, appeals, and product changes

If you want the real story, watch for the quiet signals:

• New DMA investigations, interim measures, and published decisions.
• Court rulings and appeals in major antitrust cases, especially where remedies force product changes.
• Consent screens and tracking prompts that change what “choice” looks like.
• App installation paths and payment options that become easier or harder overnight.
• Pricing tweaks, including subscription bundles, creator payouts, and marketplace fees.

These shifts aren’t abstract. They affect small businesses, creators, and consumers through fees, reach, and options. A new rule can lower costs for a start-up, or it can raise compliance burdens. A platform change can cut a shop’s sales in a week, without any law being broken.

Conclusion

The digital economy runs on habits, and habits are shaped by whoever controls the doorways: app stores, search, feeds, ads, payments, and cloud tools. Tech giants shape markets through scale and design choices. Governments shape markets through law, fines, and the power to force change. The winner depends on the battleground, and that battleground can change by country and by product.

Next time an app changes a setting, or a regulator announces a probe, pause for a moment and ask: who benefits, who loses, and what does it cost to switch? That simple question keeps you alert to power as it moves, often quietly, across the screens you use every day.