EU Targets Big Tech’s Power with Landmark Digital Act

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GÖTTINGEN, Germany — The European Union was expected to complete one of the world’s most sweeping laws this week, tackling the power of the biggest tech companies by enacting rules to affect app stores, online advertising, e-commerce, messaging. services and other everyday digital tools.

The so-called Digital Markets Act will be the most comprehensive part of digital policy. put a block most the world’s strictest rules to protect people’s online data It will come into effect in 2018. The legislation aims to stop the biggest tech platforms from using their interconnected services and key resources to box users and crush emerging competitors, create space for new entrants and encourage more competition.

What this means in practice is that companies like Google can no longer collect data from different services to serve targeted ads without users’ consent, and Apple may need to allow alternatives to the App Store on iPhones and iPads. Violators of the law, which will likely take effect early next year, could face significant fines.

The Digital Markets Act is part of the one-two punch of European regulators. Early next month, the European Union is expected to agree on another law that will force social media companies like Facebook and Instagram owner Meta to more aggressively moderate their platforms.

With these actions, Europe consolidates its leadership as the most ambitious regulator of tech companies like Apple, Google, Amazon, Meta and Microsoft. European standards are generally adopted around the world, and the latest legislation raises the bar even higher, potentially putting companies under control. new era in surveillance — just like the healthcare, transportation and banking sectors.

“Faced with the big online platforms being treated like they’re ‘too big to look at’, Europe has put its feet on the ground,” 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 field of knowledge. A new framework that can serve as a reference for democracies around the world.”

On Thursday, representatives from the European Parliament and the European Council were working behind closed doors in Brussels to reach a final agreement. The deal would come after nearly 16 months of negotiations, which was a fast paced pace for the EU bureaucracy, and would set the stage for a final vote in parliament and among representatives from the 27 member states of the union. This final approval is seen as a formality.

Europe’s moves contrast with the lack of activity in the United States. Republicans and Democrats held several high-profile congressional hearings. Reviewing the metaThey have filed antitrust lawsuits against Twitter and others and US regulators in recent years. Google and MetaNo new federal laws have been passed to address what they see as the uncontrolled power of tech companies.

Europe’s new rules could offer a preview of what’s going to 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, served as a model in countries from Japan to Brazil.

The path of the Digital Markets Act has encountered obstacles. Policymakers took it as one of the things that watchdogs say. most violent lobbying Industry groups in Brussels were never seen trying to soften the new law. They also brushed aside the Biden administration’s concerns that the rules were unfairly targeting American companies.

Questions remain about how the new law will work in practice. Companies are expected to seek ways to lessen the impact of the law through the courts. And regulators will need new funds to pay for their expanded oversight responsibilities at a time when budgets are under pressure from the pandemic.

“There will be intense and rapid pressure to show results,” said Thomas Vinje, a senior antitrust lawyer in Brussels that represents Amazon, Microsoft and Spotify.

The Digital Markets Act is expected to apply to so-called gatekeeper platforms with a market capitalization of more than 75 billion euros, or approximately $82 billion, which includes Google-owned Alphabet and YouTube, Amazon, Apple, Microsoft and Meta.

The specifics of the law read like a wish list for the competitors of the biggest corporations.

Apple and Google, which make operating systems that run on nearly every smartphone, will need to loosen their grip. Apple will probably 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 alternative payments to Apple in the App Store, which takes a 30 percent commission.

On Android devices, Google probably needs to give customers options to use it. other email and call services on handsets in Europe, similar to what they have already done in response to the previous EU antitrust decision. Wednesday, Google announced He said Spotify and some other app developers will be allowed to offer alternative payment methods to Google in the app store.

Amazon is expected to be banned from using data collected from outside vendors in its services so that it can offer competing products. separate EU antitrust investigation. Meta also failed to collect data on competitors to develop competing services.

The law could cause big changes for messaging apps. WhatsApp, which is owned by Meta, may need to offer users of competing services like Signal or Telegram a way to send and receive messages from someone using WhatsApp. These competing services will have the option to make their products interoperable with WhatsApp.

Meta and Google, the biggest sellers of online advertising, will likely be restricted from serving targeted ads without permission. Serving ads based on data collected from people moving between YouTube and Google Search or Instagram and Facebook is highly lucrative for both companies.

Policymakers were also considering adding a provision that could allow publishers in Europe to negotiate new compensation with Google and Meta for articles published on their platforms. A show down This issue in Australia briefly led to Facebook not allowing news organizations to publish articles within the country.

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

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

Columbia University law professor Anu Bradford coined the term “Brussels Effect” About the impact of EU law, he said, European rules often become global standards because it is easier for companies to enforce them across their entire organization rather than in a single geography.

“Everyone watches the DMA, whether it’s leading tech companies, their competitors or foreign governments,” said Ms. Bradford, referring to the Digital Markets Act. “Even the US Congress might conclude that when the EU regulates US tech companies, they stop watching from the sidelines and move from talking about legislative reform to de facto legislation.”

President Biden appointed lina hanA prominent Amazon critic will head the Federal Trade Commission, and Jonathan Kanter, a lawyer critical of tech giants, will head the Justice Department’s antitrust division.

But efforts to change American antitrust laws have been slow. Congressional committees have passed bills that will prevent tech platforms from opting for their own products or acquiring smaller companies. It’s unclear whether the measures have enough support to pass the entire House of Representatives and Senate.

European regulators are now faced with enforcing the new law. GDPR has been criticized for its lack of implementation.

The European Commission, the bloc’s executive body, will also have to hire large numbers of new employees to research tech companies. Years of litigation are expected as companies appeal in court for future penalties 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 reports from Washington.

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