EU targets Big Tech’s power with Landmark Digital Act

GÖTTINGEN, Germany — The European Union is expected to finalize this week one of the world’s most sweeping laws aimed at addressing the power of the biggest tech companies, setting rules will affect app stores, online advertising, e-commerce, messaging services and other everyday digital tools.

The law, known as the Digital Markets Act, will be the most sweeping piece of digital policy since block is issued the the world’s harshest rules to protect people’s data online in 2018. The act is intended to prevent the biggest tech platforms from using their interconnected services and substantial resources to attract users and weed out emerging competitors, creating a vacuum. for new entrants and foster more competition.

What that means in practice is that companies like Google can no longer collect data from various services to deliver targeted advertising without user consent, and Apple may have to allow allows alternatives to its App Store on iPhone and iPad. Violators of the law, which will likely take effect as early as next year, could face substantial fines.

The Digital Markets Act is part of a one-of-a-kind punch by European regulators. Early next month, the European Union is expected to reach an agreement on another law that would force social media companies like Meta, the owner of Facebook and Instagram, to police their platforms more aggressively. .

With these actions, Europe is cementing its leadership as the most assertive regulator of technology companies such as Apple, Google, Amazon, Meta and Microsoft. European standards are generally applied worldwide, and the latest legislation further enhances regulation by making companies a new era of surveillance – like the healthcare, transportation and banking industries.

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

On Thursday, representatives from the European Parliament and the European Council worked behind closed doors in Brussels to reach a final agreement. Their deal will come after about 16 months of negotiations – a quick pace for the EU’s bureaucracy – and will set the stage for a final vote in parliament and between representatives from 27 countries in the union. That final approval is considered a formality after this week’s deal is signed.

Europe’s moves contrast with the US’s lack of activity. While Republicans and Democrats have held several high-profile congressional hearings to scrutinize MetaTwitter and others in recent years, and US regulators have filed antitrust cases against Google and MetaNo new federal law has been passed to address what many see as the unbridled power of tech companies.

The new European rules could provide a preview of what will happen elsewhere in the world. The region’s 2018 privacy law, the General Data Protection Regulation, which restricts the collection and sharing of personal data online, has become a model in countries from Japan to Brazil.

The path of the Digital Markets Act is fraught with obstacles. Policymakers have tackled what watchdogs see as one of the fiercest lobbying effort was witnessed in Brussels as industry groups tried to downplay the new law. They also brushed off concerns raised by the Biden administration that the rules unfairly target American companies.

Questions remain about how the new law will work in practice. Companies are expected to seek to reduce the impact of the law through the courts. And regulators will need new funding to pay for their expanded oversight responsibilities at a time of budget strain due to the pandemic.

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

The Digital Markets Act is expected to apply to so-called gatekeeper platforms with a market value of more than 75 billion euros, or about $82 billion, including Alphabet, the owner of Google. and YouTube, Amazon, Apple, Microsoft and Meta.

The specifics of the law read like a wish list for rivals of the largest companies.

Apple and Google, the companies that make operating systems that run on almost any smartphone, will be asked to loosen their grip. Apple will likely have to allow alternative app stores for the first time. The law is also expected to allow companies like Spotify and Epic Games to use an alternative form of payment to Apple in the App Store, charging a 30% commission.

On Android devices, Google may have to provide customers with options to use other email and search services on handsets in Europe, similar to what they did in response to a previous EU antitrust ruling. On Wednesday, Google announced that Spotify and certain other app developers will be allowed to offer alternative payment methods to Google in their app stores.

Amazon is expected to be banned from using data collected from outside sellers on its services so it can offer competitive products, a practice that is the subject of EU’s own antitrust investigation. Meta also may not collect data about competitors to develop competitor services.

The law could lead to major changes to messaging apps. WhatsApp, which is owned by Meta, may be required to provide a way for users of rival services like Signal or Telegram to send and receive messages to someone using WhatsApp. Those rival services will have the option to make their products interoperable with WhatsApp.

The biggest online ad sellers, Meta and Google, will likely be restricted from providing targeted ads without consent. Serving ads based on data collected from people as they move between YouTube and Google Search, or Instagram and Facebook, is incredibly profitable for both companies.

Policymakers are also considering including a provision that could give European publishers the ability to negotiate new compensation with Google and Meta for articles published on their platforms . ONE showdown Regarding this issue in Australia for a short time, Facebook stopped allowing news organizations to publish articles in the country.

Meta and Amazon declined to comment. Google, Apple and Microsoft did not immediately respond to a request for comment.

Anu Bradford, a law professor at Columbia University, who coined the term “The Brussels Effect” Regarding the influence of EU law, the rules Europe says often become global standards because it is easier for companies to apply them across their entire organization rather than a single geographical region.

“Everybody is watching the DMA, be it leading tech companies, their competitors or foreign governments,” Ms. Bradford said, referring to the Technical Markets Act. number. “Perhaps even the US Congress will now conclude that it is done watching from the sidelines as the EU regulates US tech companies and will move from talking about legislative reform to actually legislation. France.”

President Biden has appointed Lina Khana prominent Amazon critic, head of the Federal Trade Commission, and an attorney critical of the tech giant, Jonathan Kanter, heads the Justice Department’s antitrust division.

But efforts to change US antitrust laws have been slow. Congressional committees have passed bills that prevent tech platforms from favoring their own products or buying smaller companies. It is unclear whether the measures will be supportive enough to pass the House and Senate fully.

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

The European Commission, the bloc’s governing body, will also have to hire new staff to investigate tech companies. Years of litigation is expected as the companies challenge the court over future penalties enacted as a result of the new law.

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

David McCabe Contribution report from Washington.

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