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EU Threatens Facebook, Amazon, Alphabet and Apple with Fines for Unfair Competition
The European Union unveiled sweeping new proposals to control tech industry giants as "gatekeepers" who could be fined up to 10% of their revenue for breaking EU rules on competition. The EU's Digital Markets Act (DMA) would set standards for treating large online platforms as "gatekeepers," based chiefly on how many users they have.
The DMA has raised complaints that it's based on untested theories and could have unintended consequences. The law is a lot more “experimental” than past European policy efforts like the GDPR privacy law, and affects only tech companies, rather than all companies in Europe, said Christian Borggreen, head of the Brussels office for the Computer and Communications Industry Association, whose members include Amazon, Facebook, Google, Intel and Twitter. European policymakers contend American tech giants have unfairly crowded out upstart competitors on the continent, and the proposed rules are their response. The rules are not emerging in a vacuum. Europe could be a test bed for other regions and countries interested in adopting the two laws as models. California passed its own wide-ranging digital privacy law following Europe's implementation of the GDPR. “The notion of breakups is completely alien to Europeans, because of course you have this concern about these being big American companies for which you cannot really achieve a breakup that is global,” said antitrust attorney Cristina Caffarra, who heads the European competition wing of the consulting firm Charles River Associates. Reorganizing companies, in other words, is up to the Americans. Billion-dollar fines have similarly failed to change Big Tech companies’ business models so far. European courts have already fined Google nearly $10 billion in three separate antitrust cases. The lawsuits challenged Google’s digital ad dominance, its practice of elevating its own shopping tool on search results, and the deals it cut with smartphone makers to get its Android operating system installed on virtually all non-Apple devices. The company has yet to meaningfully change any of these practices. “Huge fines are not going to change, and haven’t changed, the companies structurally,” said Michelle Meagher, a senior policy fellow at University College London who has worked with national regulators and private firms on antitrust law. “And that’s ultimately what needs to change if you’re going to have a change in the balance of power.”
Caffarra and Meagher both agree the antitrust cases that can really impact the way Big Tech companies do business will have to happen in the US. American prosecutors have recently launched two cases against Google and Facebook. “It was always going to be geopolitically difficult for Europe to lead because there are all these complaints from the US that this is sour grapes for not having European tech giants of our own,” said Meagher. “It’s helpful now that the US is waking up to this because it will allow for whatever we see out of the commission to be stronger than it probably could have been if there had been no action in the US.”
What's next: Lengthy deliberation among regulators from EU countries, the European Parliament and all potentially impacted parties means neither of these plans is expected to become law in Europe until 2023 or so.
The European Union unveiled sweeping new proposals to control tech industry giants as "gatekeepers" who could be fined up to 10% of their revenue for breaking EU rules on competition. The EU's Digital Markets Act (DMA) would set standards for treating large online platforms as "gatekeepers," based chiefly on how many users they have.
- Gatekeepers would be barred from favoring their own products over those of rivals — think Google steering users to its own restaurant reviews over Yelp's, for instance — or from using data in an exclusionary way that they've collected to develop their own products. They'd either have to avoid using such data or make it available to competitors to tap as well.
- Gatekeepers that break the rules could be subject to fines as high as 10% of annual global revenue.
- Large platforms that don't remove illegal posts following a government order could face fines of up to 6% of annual revenue.
- "Antitrust has to work hand-in-hand with regulation so we have a complete set of tools," European Commission executive vice-president Margrethe Vestager told reporters Tuesday. She said the new rules are aimed in part at "future-proofing" the digital market in Europe.
The DMA has raised complaints that it's based on untested theories and could have unintended consequences. The law is a lot more “experimental” than past European policy efforts like the GDPR privacy law, and affects only tech companies, rather than all companies in Europe, said Christian Borggreen, head of the Brussels office for the Computer and Communications Industry Association, whose members include Amazon, Facebook, Google, Intel and Twitter. European policymakers contend American tech giants have unfairly crowded out upstart competitors on the continent, and the proposed rules are their response. The rules are not emerging in a vacuum. Europe could be a test bed for other regions and countries interested in adopting the two laws as models. California passed its own wide-ranging digital privacy law following Europe's implementation of the GDPR. “The notion of breakups is completely alien to Europeans, because of course you have this concern about these being big American companies for which you cannot really achieve a breakup that is global,” said antitrust attorney Cristina Caffarra, who heads the European competition wing of the consulting firm Charles River Associates. Reorganizing companies, in other words, is up to the Americans. Billion-dollar fines have similarly failed to change Big Tech companies’ business models so far. European courts have already fined Google nearly $10 billion in three separate antitrust cases. The lawsuits challenged Google’s digital ad dominance, its practice of elevating its own shopping tool on search results, and the deals it cut with smartphone makers to get its Android operating system installed on virtually all non-Apple devices. The company has yet to meaningfully change any of these practices. “Huge fines are not going to change, and haven’t changed, the companies structurally,” said Michelle Meagher, a senior policy fellow at University College London who has worked with national regulators and private firms on antitrust law. “And that’s ultimately what needs to change if you’re going to have a change in the balance of power.”
Caffarra and Meagher both agree the antitrust cases that can really impact the way Big Tech companies do business will have to happen in the US. American prosecutors have recently launched two cases against Google and Facebook. “It was always going to be geopolitically difficult for Europe to lead because there are all these complaints from the US that this is sour grapes for not having European tech giants of our own,” said Meagher. “It’s helpful now that the US is waking up to this because it will allow for whatever we see out of the commission to be stronger than it probably could have been if there had been no action in the US.”
What's next: Lengthy deliberation among regulators from EU countries, the European Parliament and all potentially impacted parties means neither of these plans is expected to become law in Europe until 2023 or so.
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