The Digital Markets Act will impose a variety of requirements on these companies that are referred to as “gatekeepers”.
When Ursula von der Leyen took over the presidency of the European Commission at the end of 2019, she made it clear that her main priorities would be to fight climate change and improve another part of daily life that many believe is out of control: the digital environment.
Like the rest of the world, the commission she heads – which administers the European Union under the direction of the European Parliament and member countries – could not have foreseen that a global pandemic would add additional challenges to the debate and to an already enormously complex. Yet, like time, the parliament and the commission moved inexorably forward. Their resolve to rein in Big Tech was demonstrated last month when they announced the tentative approval of the Digital Markets Act (DMA), new legislation that will impose a variety of requirements on Big Tech companies classified as ” guardians”.
The legislative text still needs to be finalized at the technical level and checked by “lawyer-linguists”, and then receive final approval, said a statement from the parliament.
“Faced with big online platforms behaving as if they are ‘too big to care’, Europe has given up,” said Thierry Breton, a senior digital officer at the European Commission. . “We are ending the so-called Wild West that dominates our information space – a new framework that can become a benchmark for democracies around the world.”
Over 16 months of talks, representatives from the European Parliament and the Commission have hammered out the details of a far-reaching law that sets firm limits on the biggest tech companies. The regulations will affect app stores, online advertising, e-commerce, messaging services and other everyday digital tools. An announcement from the European Parliament said the new rules target “large companies providing so-called ‘core platform’ services most prone to unfair commercial practices, such as social media or search engines, with a market capitalization of ‘at least 75 billion euros or an annual turnover of 7.5 billion’.
“Designated as ‘gatekeepers’, these companies provide certain services such as browsers, messaging or social media which have at least 45 million monthly end users in the EU and 10,000 annual business users,” the statement said. .
In addition to having huge revenue and user numbers, a “guardian” company must “control one or more core platform services in at least three member states”, according to a press release from the commission. These basic services include “marketplaces, app stores, search engines, social networks, cloud services, advertising services, voice assistants and web browsers”.
Small and medium-sized enterprises “are exempt from being identified as gatekeepers, except in exceptional cases”, specifies the press release.
Among perhaps others, Google, Apple, Amazon, Facebook and Microsoft all clearly meet the “gatekeeper” criteria, which is hardly surprising. It is no secret that they are indeed the main targets of the legislation.
“The Digital Markets Act puts an end to the ever-increasing dominance of big tech companies,” said Andreas Schwab, Member of the European Parliament from Germany. “Now they have to show that they also enable fair competition on the Internet.”
In practical terms, this means that large messaging services such as Whatsapp, Facebook Messenger and Apple’s iMessage will need to open up and interact with smaller messaging platforms. The mission could pose a huge technical challenge because highly secure encryption and interoperability are by definition at odds with each other.
Another provision of the new DMA states that “the combination of personal data for targeted advertising will only be permitted with the express consent” of individual consumers and Internet users.
Some examples of the potential impact of the new law include requiring Apple to allow alternatives to its App Store for downloading apps and allowing payment methods for the App Store other than Apple.
Additionally, Google and Meta, the parent company of Facebook and Instagram, will likely no longer be able to offer cross-platform targeted ads that use data collected as users move between services owned by the same company. An example would be that data collected from Google search could not be used by YouTube, which is owned by Google. Amazon will be banned from using data collected from outside sellers that is then used to offer products that compete with those same sellers, a practice that is already the subject of a separate EU antitrust investigation.
If a “custodian” fails to follow the rules, he is liable to fines of up to 10% of his total worldwide turnover for the previous financial year and 20% in the event of repeated infringements.
“In the event of systematic violations, the commission may prohibit them from acquiring other companies for a certain period of time,” the statement said.
While they’re still weighing the implications, it’s no surprise that Big Tech companies have lobbied against the new rules and have now spoken out against them. Their defense is more usual: alleging the requirements would diminish innovation, threaten intellectual property rights and could compromise users’ privacy. Yet critics say these are the very problems with Big Tech as it buys out competitors to stifle competition, develops invasive personal profiles for ad targeting, and erects walls that exclude small businesses.
Breaking down these walls will certainly help encourage new breakthroughs that use the power of digital technology to improve our lives. Inundated by digital overload, many of us yearn for improved quality and ethics in the digital experience, not more of the same.
“More competition promotes more innovation and that is precisely what will happen,” he said.
Jon Van Housen and Mariella Radaelli are seasoned international journalists based in Italy