Tech Morning: Europe Stands Firm Against Trump

The tech industry is facing a wave of regulatory and economic pressure, as Trump threatens tariffs against European tech regulations. Meanwhile, AI infrastructure investments continue to surge. Here's what you need to know:

Story of the Day

Europe Refuses to Back Down on Big Tech Regulation

President Donald Trump has threatened tariffs and other actions against countries that tax, fine, or regulate U.S. tech companies in ways his administration deems discriminatory. This targets a range of European and U.K. laws, including digital services taxes (DSTs), privacy rules (like GDPR), and content moderation laws (like the Digital Services Act and Online Safety Act).

The European Commission has responded swiftly, stating concerns about the "broad interpretations" in Trump's memorandum and potential impacts on EU-U.S. trade. They've vowed to "respond swiftly and decisively" to defend their regulatory autonomy.

At the heart of the issue are DSTs, which levy a small percentage tax on the local revenues of online platforms. Trump claims these taxes "plunder American companies," but experts argue they target the extraction of user data, similar to how oil companies were taxed in the past. The U.K. Treasury notes their DST raises up to £1 billion annually and doesn't discriminate based on a company's origin.

Trump's memo also attacks laws limiting cross-border data flows (likely targeting GDPR) and those requiring tech firms to moderate content. This is seen as an assault on European values and norms. British lawmaker Beeban Kidron called Trump's stance "economic machismo," stating that governments must prioritize protecting their citizens.

Essential Reads

Meta's Potential $200 Billion Data Center Project: Meta Platforms is reportedly in talks for a massive new data center campus to support its AI projects, potentially costing over $200 billion. This potential investment underscores the ongoing surge in AI infrastructure spending as companies race to integrate AI into their products and services.

Workday Exceeds Earnings Estimates: Workday beat earnings estimates on strong demand for its subscription services, driven by a resilient job market and cooling inflation. The integration of generative AI and machine learning into Workday's product offerings, including the Workday Agent System of Record, has boosted investor confidence. Despite the positive results, Workday is laying off approximately 1,750 employees to focus on AI investments.

Intuit's AI-Driven Growth: TurboTax maker Intuit forecast third-quarter revenue above Wall Street estimates, betting on growing demand for its AI-powered financial services software. Intuit's AI assistant ("Intuit Assist") and the U.S. tax season is boosting demand.

Onsemi Restructures, Cuts Jobs: Onsemi is planning a 9% cut to its workforce (about 2,400 employees) as part of a restructuring to maintain innovation amid falling demand and revenue. The cuts are expected to save $105 million to $115 million annually. CEO Hassane El-Khoury stated the cuts would not be in research and development.

Market Impact

Intuit: Shares rose nearly 5% in extended trading on the strong revenue forecast.

Workday: Shares surged over 9% in after-hours trading.

Key Quotes

• Hassane El-Khoury (Onsemi CEO): "We’re reducing projects that don’t impact the fundamentals of the company; don’t impact the future of the company...That’s why the focus for me was not on cost reduction, but on restructuring, which means we will still be able to respond.”
• Zane Rowe (Workday CFO): "Our fourth-quarter results were driven by solid performance across key growth areas of the business, including continued momentum with our full suite and financials products, growing demand for our AI SKUs, and strong execution across industry verticals."