2024 is poised to be a pivotal year in digital policy, as three shifts will mirror the effect seen in 2018 when the GDPR reshaped data privacy norms and impacted global business practices. Digital policy will move beyond data rules towards binding regulations on AI, digital platforms, and the digital economy's taxation. Each shift bears implications for digital and traditional businesses.

Digital policy has gained significant momentum in 2023. The Digital Policy Alert documented over 2’500 policy developments, a significant uptick from prior years. Policymakers’ main priorities were data governance and AI regulation. India, Indonesia, Saudi Arabia, and several US states enacted comprehensive privacy laws. The EU and the US negotiated a data transfer framework, while China continued finalising its data regime. In enforcement, the Irish data protection authority issued a record EUR 1.2bn fine for Meta. Regarding AI, ongoing negotiations made up the bulk of regulatory activity. Proposals for AI laws advanced in the EU, Canada, Brazil, South Korea, and Argentina, among others. The US adopted a voluntary framework and an Executive Order on AI without binding obligations for firms. China adopted regulations on generative AI and announced comprehensive AI legislation. 

Regarding AI regulation, 2024 will see a shift from proposals to enactment, as at least one major actor will adopt a binding regulatory framework. The framework’s business impact will depend on three fundamental design choices. A risk-based framework, such as the EU AI Act, sets distinct rules for specific AI use cases. Businesses face different compliance duties based on the realms in which they apply AI, for instance in workforce management or providing healthcare services. A technology-specific framework, such as China’s generative AI regulation, creates obligations for certain AI technologies regardless of their use case. If a ubiquitous AI technology is strictly regulated, businesses may halt integration even for trivial use cases. Finally, an AI liability regime can create exposure for the developers, deployers or users of AI. Third-party liability regimes may expose businesses to risks beyond their control, for example software functionality. Current differences in proposed AI regulations worldwide foreshadow a fragmented AI regulatory landscape. When AI rules become binding, regulatory differences will demand strategic reevaluation of AI integration and market entry strategies from multinational corporations. 

The regulation of digital platforms in 2024 will be spearheaded by the implementation of landmark rules in two areas: Competition, as in the EU Digital Markets Act (DMA), and online content, as in the UK Online Safety Act and the EU Digital Services Act. Competition rules target large tech companies and aim to level the playing field for their business clients. For instance, the DMA requires digital “gatekeepers” to share data with their business clients. Gatekeepers are further prohibited from combining data across services or using non-public data when competing with business clients. There may, however, be unintended consequences. 2023 has shown strong digital industry reactions to rules targeting their core business, especially regarding online content. In Canada, Meta started removing news content due to the Online News Act’s requirement to remunerate publishers. In the United Kingdom, Apple and WhatsApp threatened market exits due to privacy concerns regarding the Online Safety Act’s. As the implementation of landmark digital platform regulation looms, expect digital businesses to adjust market entry strategies and pricing models, with negative ripple effects. Traditional businesses may suffer from a reduced availability in digital distribution and marketing channels, or price increases. 

Lastly, the 2024 outlook on tariffs and taxes hinges on the outcome of two international agreements, at the World Trade Organization (WTO) and within the OECD/G20 framework. Multinational corporations should brace for possible shifts in global taxation and digital tariff regimes. First, at the 13th WTO Ministerial Conference in February 2024, its members will decide whether to extend the moratorium on customs duties on electronic transmissions. The intellectual case against such duties is settled. But the extension, which requires unanimity among 164 WTO members, has become a political issue. Developing countries worry about domestic policy space and certain governments use their vote as leverage for concessions elsewhere. Second, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting is already one year delayed and has yet to be implemented by many of the 145 participating governments. Conditional on its successful conclusion, the US had reached standstill agreements with several countries to halt the imposition of slated digital service taxes. Without significant progress, pressure for new domestic taxes on digital goods and services will rise again, and international tensions along with it. 

2024 is set to be a defining moment for digital policy, with crucial regulatory shifts in AI, digital platforms, and taxation poised to impact global business practices. These changes demand strategic adaptability from both digital and traditional businesses.