Göttingen, Germany – The European Union on Thursday approved one of the world’s most far-reaching laws to deal with the power of the biggest tech companies, potentially reshaping app stores, online advertising, e-commerce, messaging services and other everyday digital tools.
The law, called the Digital Markets Act, is the most comprehensive piece of digital policy since block mode The The world’s toughest rules for protecting people’s data online Coming into effect in 2018. The legislation aims to prevent the largest tech platforms from using their interconnected services and vast resources to confine users and crush emerging competitors, making way for new entrants and promoting more competition.
What that means in practice is that companies like Google will no longer be able to collect data from different services to deliver targeted ads without users’ consent and that Apple may have to allow alternatives to its store on iPhones and iPads. Violators of the law, which will take effect later this year, could face penalties of up to 20 percent of their global revenue — which could amount to tens of billions of dollars — for repeat offences.
The Digital Markets Act is part of a two-way strike by European regulators. Early next month, the European Union is expected to reach agreement 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 is consolidating its leadership as the most aggressive regulator for technology companies such as Apple, Google, Amazon, Meta and Microsoft. European standards are often adopted around the world, and recent legislation raises the bar by potentially subjecting companies to A new era of censorship Just like the healthcare, transportation and banking sectors.
Faced with the big online platforms that act as if they were ‘too big to care’, they have stepped back from their position, said Thierry Breton, a senior digital officer at the European Commission. “We are putting an end to the so-called Wild West controlling our information space. A new framework that could become a reference for democracies around the world.”
On Thursday, representatives from the European Parliament and the European Council hammered out the latest details of the law in Brussels. The agreement came after nearly 16 months of talks – a fast paced EU bureaucracy – and paves the way for a final vote in parliament and among representatives of 27 EU states. Such consent is seen as a formality.
Europe’s moves contrast with the lack of activity in the United States. While Republicans and Democrats held several high-level congressional hearings Meta checkingIn recent years, Twitter, among others, and US regulators have filed antitrust lawsuits google And the deadNo new federal laws have been passed to address what many see as the unfettered power of tech companies.
Europe’s new rules could offer a preview of what’s to come elsewhere in the world. The region’s online privacy law, the General Data Protection Regulation, which restricts the collection and sharing of personal data online, is a model in countries from Japan to Brazil.
The path to digital markets law encountered obstacles. Policymakers have dealt with what oversight bodies have said is one of The fiercest lobbying effort It was seen in Brussels as industry groups tried to water down the new law. They also ignored concerns raised by the Biden administration that the rules were unfairly targeting US companies.
Questions remain about how the new law will work in practice. Companies are expected to look for ways to reduce their impact through the courts. And regulators will need fresh funding to pay for their expanded oversight responsibilities, when budgets come under pressure from the pandemic.
“The pressure will be intense to show results and fast,” said Thomas Finney, a veteran antitrust lawyer in Brussels who has represented Amazon, Microsoft and Spotify.
Technology industry groups have criticized the new law as biased against US companies and predicted it would hurt innovation in Europe.
“This bill was written to target American technology companies, and it will have an impact on American workers,” said Adam Kovacevich, chief executive of the Chamber of Progress business group in Washington. “European regulations that characterize our tech sector threaten American jobs — not just in Silicon Valley, but in cities from Pittsburgh to Birmingham.”
The law on digital markets will apply to so-called gatekeeper platforms, which are determined by factors including a market value of more than 75 billion euros, or about $83 billion. The group includes Alphabet, owner of Google and YouTube; Amazon. an Apple; Microsoft; and dead.
The details of the law read like a wish list of big company competitors.
Apple and Google, which make the operating systems that run on nearly every smartphone, will be asked to loosen their grip. Apple will have to allow its own App Store alternatives to download apps, a change the company has warned could compromise security. The law will also allow companies like Spotify and Epic Games to use payment methods other than Apple on the App Store, which charge a 30 percent commission.
Amazon will be prohibited from using data collected from third-party sellers on its services so that it can offer competing products, a practice that is subject to Separate EU antitrust investigation.
The law will result in major changes to messaging apps. WhatsApp, which is owned by Meta, may be required to offer a way for users of competing services such as Signal or Telegram to send and receive messages to someone using WhatsApp. Those competing services will have the option of making their products interoperable with WhatsApp.
The two largest online advertising vendors, Meta and Google, will see new restrictions on showing targeted ads without consent. These ads – based on data collected from people as they move between YouTube and Google Search or Instagram and Facebook – are very profitable for both companies.
“Big gatekeepers have prevented businesses and consumers from taking advantage of competitive digital markets,” Margrethe Vestager, executive vice president of the European Commission that oversees digital and competition policy, said in a statement. She said companies now had 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, Columbia University law professor who coined the term ‘Brussels effect’ On the impact of EU law, he said European rules often became global standards because it was easier for companies to apply them across their entire organization rather than a single geographic area.
“Everyone is watching DMA, whether it’s leading tech companies, their competitors 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 with surveillance from the sidelines when the EU regulates US technology companies and will move from talk of legislative reform to actual legislation.”
President Biden appointed Lina KhanJonathan Kanter, a prominent Amazon critic, for leading the Federal Trade Commission and an attorney critical of the tech giant, for heading the Justice Department’s antitrust division.
But efforts to change US antitrust laws are progressing slowly. Congressional committees have passed bills that would prevent technology platforms from favoring their own products or buying smaller companies. It is unclear whether the measures have enough support to pass the House and the full Senate.
European regulators are now facing the imposition of the new law. The General Data Protection Regulation (GDPR) has been criticized for lack of enforcement.
The European Commission, the bloc’s executive branch, will have to appoint dozens of new employees to investigate tech companies. Years of litigation are expected to continue as companies file lawsuits for future penalties issued as a result of the new law.
“The gatekeepers will not be entirely without their defences,” said Mr Feng, Brussels antitrust lawyer.
David McCabe Contributed to reporting from Washington.
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