The European Union has opened a new chapter in antitrust enforcement for the digital economy, adopting a series of new rules aimed at curbing abuses by some of the world’s largest tech companies.
In a deal negotiated Thursday night, officials from the EU Parliament, Council and Commission concluded 15 months of intense negotiations on a new rulebook for big-tech giants operating in the European market Digital Markets Act.
Google, Amazon, Meta, Apple, Microsoft and other global players such as accommodation company Booking and Chinese e-commerce player Alibaba will fall within the scope of the Digital Markets Act, which presents a set of do’s and don’ts for tech companies’ behavior in digital markets. A final list of companies is now being drawn up by the EU Commission.
The scope of application of the rules includes platforms – so-called gatekeepers – with a market capitalization of 75 billion euros or a turnover in the European Economic Area of 7.5 billion euros or more. Affected platforms must also have 45 million active end users and 10,000 active business users per year.
“Gatekeepers must now adhere to a clearly defined set of duties and prohibitions,” said Executive Vice-President of the European Commission, Margrethe Vestager. “This regulation, together with strong competition law enforcement, will offer consumers and businesses fairer terms for many digital services across the EU.”
For their part, the tech giants will be under intense pressure to adapt their products and services to the regulations. With the expected final adoption by Parliament and Council imminent, the text will enter into force 20 days later and the rules will become applicable six months after that date.
“These rules are key to stimulating and unlocking digital markets, enhancing consumer choice, enabling a better sharing of value in the digital economy and fostering innovation. The European Union is the first to take such decisive action,” said Cédric O, French Minister of State in charge of digital.
The new rules prohibit certain anti-competitive practices that big tech companies have come under fire in the past, such as: accused For example, 2019’s Facebook — as well as new requirements for operating systems to open up to third-party apps — give iPhone users more flexibility in deciding what programs to install on their phones.
“Consumers will have the choice to use the core services of big technology companies, such as browsers, search engines or messaging, all without losing control of their data,” said Andreas Schwab, lead MEP for the dossier.
Tech giants are also prevented from bundling services, such as Google’s previous actions to pre-install Chrome on Android devices. Users should also be advised that the first time they use a tech company’s service, they have the option to use a competitor – a move that may give users more choices when deciding, for example, whether to use an alternative browser on their mobile device want to use.
In addition, interoperability rules have been approved, allowing users to communicate through various messaging services such as WhatsApp and Signal.
ex ante intervention
While EU competition authorities have historically caught up when it comes to curbing these abusive practices, the DMA now outright bans such behavior in a bid to help smaller players compete against larger companies.
“We are seeing a shift from a penal system where large corporations are punished with fines and court systems, to one that also cuts power at the source,” said Marco Carlizzi, Partner at RSM Legal Group.
“This new approach will facilitate the development of smaller digital businesses that previously struggled to get a foothold in the market.”
For its part, the tech lobby expressed certain reservations about the DMA text following its passage on Thursday night, demanding a seat at the table to negotiate an agreement on how some of the technical details of the rules could be settled.
“There are still several parts of the text that are not clear, so we call on the European Commission to work with industry stakeholders to help them clarify and apply them sensibly to ensure we get the best results.” ‘ said Cecilia Bonefeld-Dahl, general director of the tech lobby DigitalEurope, which represents players such as Amazon, Apple, Facebook’s parent company Meta and Google.
“Some of the new rules will require extensive technical and legal work, such as B. the interoperability requirements and the obligations to share data,” she added.
Big Tech’s lobbying efforts are failing
Since its initial proposal in December 2020, the DMA has faced significant lobbying pressure from Big Tech, with Apple CEO Tim Cook even saying at one point that the effort would “destroy the security of the iPhone.” Meta’s President of Global Affairs Nick Clegg said the rules “petrify“Innovation in the digital economy.
On Thursday evening, Apple reiterated its concerns that the rules could open up security gaps.
“We remain concerned that some provisions of the DMA create unnecessary privacy and security vulnerabilities for our users, while others prohibit us from charging for intellectual property in which we invest heavily,” a spokesman said.
Additionally, there was growing skepticism about the rules in Washington, despite President Joe Biden’s administration taking a more progressive approach to antitrust enforcement in the digital economy.
A series of letters had been sent by US government agencies to Brussels lawmakers, raising concerns that the move would disproportionately affect American companies. However, that narrative – which came mostly from the US Department of Commerce – was eventually toned down after the White House spoke out in favor of cracking down on big tech abuse.
The clock is now ticking to identify the platforms subject to the rules before formal enforcement procedures begin. To do this, the Commission needs to redeploy staff to ensure there is sufficient capacity to do the work.
Previous estimates had predicted that 80 Commission staff would be working on enforcing the DMA, but this is an area where leading MEP Schwab has been consistently critical and recently penned a report Letter in which he called for the creation of at least 220 posts in the EU executive.
The Commission will be under a tight deadline to effectively enforce the DMA, with the list of prohibitions and obligations expected to apply to companies within the scope of the DMA later this year.
https://www.politico.eu/article/eu-landmark-rules-big-tech-anti-trust-digital-markets-act-dma/?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication The EU heralds a brave new world of big tech regulation – POLITICO