The EU's new law will make big tech companies subject to a number of obligations and prohibitions designed to prohibit what the 27-member union considers unfair market practices or practices that create or strengthen barriers for other companies. File Photo by Patrick Seeger/EPA-EFE
March 25 (UPI) -- The European Union has passed a new law that lays out a wide range of rules that target the world's most influential technology companies, and could change the way customers shop, see ads and interact online.
Part of the motivation for the Digital Markets Act is to boost competition, open markets to new competitors and decrease the influence of a small number of tech giants.
The European Commission said the law is among the first initiatives to comprehensively regulate the power of so-called "tech gatekeeper power."
"What we want is simple: Fair markets also in digital," EC Competition Commissioner and Executive Vice President Margrethe Vestager said in a statement Thursday. "We are now taking a huge step forward to get there -- that markets are fair, open and contestable."
Vestager said large gatekeeper tech platforms are stifling competition and keeping consumers from the benefits of an open digital market. One way Big Tech is doing this, she says, is favoring their own products over similar products on e-commerce platforms.
The EU said almost a year ago that it was investigating Google over whether the U.S. tech giant is stifling competition in the bloc by favoring its own digital advertising platform. File Photo by John Angelillo/UPI
Vestager said more than a year ago that Amazon, in particular, was using its dominant market position to distort competition. Similar complaints have been leveled at other online giants like Google and Apple.
"The gatekeepers will now have to comply with a well-defined set of obligations and prohibitions," Vestager added. "This regulation, together with strong competition law enforcement, will bring fairer conditions to consumers and businesses for many digital services across the EU."
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The EU's new law will make big tech companies subject to a number of obligations and prohibitions designed to prohibit what the 27-member union considers unfair market practices or practices that create or strengthen barriers for other companies.
The Digital Markets Act will also create an enforcement mechanism to ensure speedy compliance.
"This agreement seals the economic leg of our ambitious reorganization of our digital space in the EU internal market," Thierry Brenton, EC commissioner for the internal market, said in a statement. "We will quickly work on designating gatekeepers based on objective criteria."
Brenton said companies will have six months to comply with the new obligations.
"Through effective enforcement, the new rules will bring increased contestability and fairer conditions for consumers and business users, which will allow for more innovation and choice in the market," he said.
Tech companies will face new antitrust legislation in the EU as early as this year
The European Union may have just handed the US and North America its latest blueprint for regulating big tech with its new Digital Markets Act (DMA) legislation.
The DMA marks a concerted effort by the EU to give both big tech and the countries it operates in, outside of the US, a fair understanding of baseline reforms to antitrust concerns.
According to the News - European Parliament, "The Digital Markets Act (DMA) will blacklist certain practices used by large platforms acting as “gatekeepers” and enable the Commission to carry out market investigations and sanction non-compliant behavior."
While the language needs to be finalized to get passed officially, the DMA is defining "gatekeepers" as businesses or firms with a minimum market capitalization of €75 billion equal to $82B and or €7.5 billion annually as well as 45 million monthly users that make use of an app or platform. By including the "or" the EU broadens the antitrust conversation to include big name players such as Facebook as well as unthought of ones such as Booking.com, according to The Verge.
Regarding the tertiary details, the DMA will be imbued with the power to fine "gatekeepers" up to 10 percent of total worldwide turnover from the preceding fiscal year and 20 percent for repeat infractions that fail to meet the following antitrust objective goals in the EU:
- Interoperability. Gatekeepers should allow their platforms to work with similar services from smaller third-parties. Exactly how this will be interpreted isn’t yet clear, but it could mean letting users on large messaging platforms like WhatsApp contact users on other platforms.
- The right to uninstall. Consumers are to be given more choice over software and services, particularly in mobile operating systems like iOS and Android. They should be able to uninstall any preloaded software, and be giving a choice when setting up a new device what service they want to use for applications like email and web browsing.
- Data access. Businesses should be able to access data they generate for larger platforms. This would mean, for example, letting companies who sell goods on platforms like Amazon access Amazon’s analytics about their performance.
- Advertising transparency. If a company buys adverts on Facebook, for example, they should be given the tools to independently verify the reach of their ads. Companies will also be barred from “combining personal data for targeted advertising” without explicit consent.
- An end to self-preferencing. Companies can’t use their platforms to put their products first. This means Google, for example, can’t put its shopping service at the top of its search results unless there is some sort of competitive tender for that spot.
- App store requirements. The commission says platform owners can no longer require app developers to “use certain services (e.g. payment systems or identity providers) in order to be listed in app stores.”
In reaction to the news of the DMA, both Google and Apple, prime targets of many of the antitrust stipulations, have issued their "concern" for the ruling, in the following responses:
We remain concerned that some provisions of the DMA will create unnecessary privacy and security vulnerabilities for our users while others will prohibit us from charging for intellectual property in which we invest a great deal. - Apple
"While we support many of the DMA's ambitions around consumer choice and interoperability, we're worried that some of these rules could reduce innovation and the choice available to Europeans. - Google
As Reuters notes, both Apple and Google have been lobbying against the passing of the DMA for some time now.
Despite the DMA being in the works for quite some time and deriving many of its tentpole objectives from real-world legislative battles in the EU, it remains early days for tech companies to digest the broad implications.
EU Commissioner for Competition, Margrethe Vestager seems optimistic about it officially passing and being implemented as early as October of 2022, which could give some "gatekeepers" as little as three months afterwards to make the necessary interoperability changes suggested by the DMA
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