EU targets Big Tech’s power with Landmark Digital Act

GÖTTINGEN, Germany — The European Union on Thursday passed one of the world’s most far-reaching laws to tackle the power of the largest tech companies, potentially to shut down app stores, online advertising, e-commerce, messaging and other everyday digital tools. reform.

The law, called the Digital Markets Act, is the most sweeping piece of digital policy since the bloc introduced the world’s strictest rules in 2018 to protect people’s online data. The legislation aims to prevent the largest tech platforms from using their interlocking services. and significant resources to bring in users and crush emerging rivals, create space for new entrants, and fuel more competition.

What that means in practical terms is that companies like Google can no longer collect data from various services to serve targeted ads without users’ consent, and Apple may need to allow alternatives to its App Store on iPhones and iPads. Violators of the law, which will come into effect later this year, could face fines of up to 20 percent of their global revenues — which could run into tens of billions of dollars — for repeated violations.

The Digital Markets Act is part of a one-two punch from European regulators. The European Union is expected to reach an agreement next month on a law that would force social media companies such as Meta, the owner of Facebook and Instagram, to monitor their platforms more aggressively.

With these actions, Europe confirms its leadership as the most assertive regulator of technology companies such as Apple, Google, Amazon, Meta and Microsoft. European standards are often adopted globally, and the latest legislation is raising the bar even higher by potentially bringing businesses under a new era of scrutiny, as do the healthcare, transport and banking sectors.

“Faced with major online platforms acting as if they were ‘too big to care’, Europe took a foothold,” said Thierry Breton, one of the top digital officials in the European Commission. “We are putting an end to the so-called Wild West that dominates our information space. A new framework that can become a reference for democracies worldwide.”

On Thursday, representatives of the European Parliament and the European Council in Brussels hammered out the final details of the law. The agreement followed about 16 months of talks – a fast pace for the EU bureaucracy – and sets the stage for a final vote in Parliament and between representatives of the 27 countries in the union. This approval is seen as a formality.

The movements of Europe contrast with the lack of activity in the United States. While Republicans and Democrats have held several high-profile congressional hearings in recent years to scrutinize Meta, Twitter, and others, and U.S. regulators have filed antitrust lawsuits against Google and Meta, no new federal laws have been passed to address what many see as the tech unchecked power of corporations.

Europe’s new rules could be a foretaste of what will happen elsewhere in the world. The region’s online privacy law, the General Data Protection Regulation, which restricts the online collection and sharing of personal data, has served as a model in countries from Japan to Brazil.

The path of the Digital Markets Act encountered hurdles. Policymakers dealt with what watchdogs said was one of the fiercest lobbying efforts ever seen in Brussels as industry groups tried to water down the new law. They also brushed aside the Biden administration’s concerns that the rules were unfairly targeting US companies.

Questions remain about how the new law will work in practice. Companies are expected to look through the courts for ways to mitigate its impact. And regulators will need new funding to pay for their expanded oversight responsibilities as budgets are strained by the pandemic.

“The pressure will be great to show results, and quickly,” said Thomas Vinje, an experienced antitrust lawyer in Brussels who has represented Amazon, Microsoft and Spotify.

Tech industry groups criticized the new law as biased against US companies and predicted it would hurt innovation in Europe.

“This bill was written to target US tech companies, and its impact will fall on US workers,” said Adam Kovacevich, chief executive of the Chamber of Progress, a Washington trade group. “European regulations spotlighting our tech sector threatens American jobs — not just in Silicon Valley, but in cities from Pittsburgh to Birmingham.”

The Digital Markets Act will apply to so-called gatekeeper platforms, which are determined by, among other things, a market value of more than 75 billion euros, or approximately $83 billion. The group includes Alphabet, the owner of Google and YouTube; Amazon; Apple; Microsoft; and Meta.

Details of the law read like a wish list for rivals of the biggest corporations.

Apple and Google, who make the operating systems that run on almost every smartphone, should lose their grip. Apple will have to allow alternatives to its App Store for downloading apps, a change the company has warned could hurt security. The law will also allow companies such as Spotify and Epic Games to use payment methods other than Apple’s in the App Store, which will charge a 30 percent commission.

Amazon may not use data collected from third-party sellers for its services so that it could offer competing products, a practice that is the subject of a separate EU antitrust investigation.

The law brings big changes for messaging apps. WhatsApp, which is owned by Meta, may need to provide a way for users of competing services such as Signal or Telegram to send and receive messages to someone using WhatsApp. Those rival services would have the option to make their products interoperable with WhatsApp.

The largest online ad sellers, Meta and Google, are getting new limits on serving targeted ads without permission. Such ads — based on data collected from people as they move between YouTube and Google Search, or Instagram and Facebook — are hugely lucrative for both companies.

“Major gatekeeper platforms have prevented businesses and consumers from reaping the benefits of competitive digital markets,” Margrethe Vestager, the European Commission’s executive vice president overseeing digital and competition policy, said in a statement. The companies, she said, will now have to “comply with a well-defined set of obligations and prohibitions”.

Meta, Microsoft and Amazon declined to comment. Google and Apple did not respond to requests for comment.

Anu Bradford, a law professor at Columbia University who coined the term “Brussels Effect” to describe the influence of EU law, said European rules often became global norms because it was easier for companies to apply them across their organization. fit rather than in one geographic location.

“Everyone is looking at the DMA, be it the leading tech companies, their rivals or foreign governments,” said Ms Bradford, referring to the Digital Markets Act. “It is possible that even the US Congress will now conclude that they are done watching from the sidelines as the EU regulates US tech companies and moves from talking about legislative reform to actual legislation.”

President Biden has appointed Lina Khan, a prominent Amazon critic, to head the Federal Trade Commission and a lawyer criticizing the tech giants, Jonathan Kanter, to head the Justice Department’s antitrust division.

But efforts to change US antitrust laws are slow. Congressional committees have passed bills that would prevent technology platforms from preferring their own products or buying smaller companies. It is unclear whether the measures have sufficient support to allow the full House and Senate to pass.

European regulators now face enforcement of the new law. The GDPR has been criticized for its lack of enforcement.

The European Commission, the bloc’s executive branch, will also have to hire dozens of new employees to investigate the tech companies. Years of litigation are expected as companies file lawsuits against future fines imposed as a result of the new law.

“The gatekeepers,” said Mr Vinje, the Brussels antitrust lawyer, “will not be completely defenseless.”

David McCabe contributed to reporting from Washington.

This post EU targets Big Tech’s power with Landmark Digital Act

was original published at “”