Göttingen, Germany – The European Union is finalizing one of the world’s most far-reaching laws to deal with the power of the biggest tech companies, possibly reshaping app stores, online advertising, e-commerce, messaging services and other everyday digital tools.
On Thursday, officials were finalizing the law, called the Digital Markets Act, which will be the most comprehensive part of digital policy since block mode The The world’s toughest rules for protecting people’s data online Coming into effect in 2018. The legislation aims to prevent the largest tech platforms from using their interconnected services and large resources to confine users and crush emerging competitors, making way for new entrants and promoting more competition.
What that means in practice is that companies like Google can no longer collect data from different services to deliver targeted ads without users’ consent and that Apple may have to allow alternatives to its store on iPhones and iPads. Violators of the law, which is likely to take effect early next year, could face heavy fines.
The Digital Markets Act is part of a two-way strike by European regulators. Early next month, the European Union is expected to reach agreement on a law that would force social media companies such as Meta, the owner of Facebook and Instagram, to monitor their platforms more aggressively.
With these actions, Europe is consolidating its leadership as the most aggressive regulator for technology companies such as Apple, Google, Amazon, Meta and Microsoft. European standards are often adopted around the world, and recent legislation raises the bar by potentially subjecting companies to A new era of censorship Just like the healthcare, transportation and banking sectors.
Faced with the big online platforms that act as if they were ‘too big to care,’ said Thierry Breton, a senior digital officer at the European Commission, they have stepped back from their position. “We are putting an end to the so-called Wild West controlling our information space. A new framework that could become a reference for democracies around the world.”
On Thursday, representatives from the European Parliament and the European Council worked behind closed doors in Brussels to reach a final agreement. Their agreement will come after nearly 16 months of talks – at a rapid pace for the EU’s bureaucracy – and pave the way for a final vote in Parliament and among representatives of 27 EU countries. This final approval is a formality.
Europe’s moves contrast with the lack of activity in the United States. While Republicans and Democrats held several high-level congressional hearings Meta checkingIn recent years, Twitter, among others, and US regulators have filed antitrust lawsuits google And the deadNo new federal laws have been passed to address what many see as the unfettered power of tech companies.
Europe’s new rules could offer a preview of what’s to come 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, is a model in countries from Japan to Brazil.
The path to digital markets law encountered obstacles. Policymakers have dealt with what oversight bodies have said is one of The fiercest lobbying effort It was seen in Brussels as industry groups tried to water down the new law. They also ignored concerns raised by the Biden administration that the rules were unfairly targeting US companies.
Questions remain about how the new law will work in practice. Companies are expected to look for ways to reduce their impact through the courts. And regulators will need fresh funding to pay for their expanded oversight responsibilities, when budgets come under pressure from the pandemic.
“The pressure will be intense to show results and fast,” said Thomas Finney, a veteran antitrust lawyer in Brussels who has represented Amazon, Microsoft and Spotify.
The Digital Markets Act is expected to apply to so-called gatekeeper platforms, which include Alphabet, owner of Google, YouTube, Amazon, Apple, Microsoft and Meta.
The details of the law read like a wish list of big company competitors.
Apple and Google, which make the operating systems that run on nearly every smartphone, will be asked to loosen their grip. Apple will likely allow alternative app stores for the first time. The law is also expected to allow companies like Spotify and Epic Games to use Apple’s alternative payments in the App Store, which charges a 30 percent commission.
On Android devices, Google will likely provide customers with options to use Email and other search services on mobile phones in Europe, similar to what it was already doing in response to an earlier antitrust ruling in the European Union. Wednesday, Google announced Spotify and some other app developers will be allowed to offer alternative payment methods to Google within their App Store.
It is expected that Amazon will be prohibited from using data collected from third-party sellers on its services in order to be able to offer competing products, a practice that is the subject of Separate EU antitrust investigation. Meta has also not been able to collect data about competitors to develop competing services.
The law could lead to major changes in messaging apps. WhatsApp, which is owned by Meta, may be required to offer a way for users of competing services such as Signal or Telegram to send and receive messages to someone using WhatsApp. Those competing services will have the option of making their products interoperable with WhatsApp.
The largest online advertising vendors, Meta and Google, will likely be restricted from serving targeted ads without consent. Serving ads based on data collected from people as they move between YouTube and Google Search, or Instagram and Facebook, is very profitable for both companies.
Policy makers were also considering including a clause that could give publishers in Europe the ability to negotiate new compensation with Google and Meta for articles published on their platforms. a confrontation Because of this issue in Australia, Facebook briefly pushed to stop allowing news organizations to publish articles within the country.
“Big gatekeepers have prevented businesses and consumers from taking advantage of competitive digital markets,” Margrethe Vestager, executive vice president of the European Commission that oversees digital and competition policy, said in a statement. She said companies now had to “comply with a well-defined set of obligations and prohibitions.”
Meta, Microsoft and Amazon declined to comment. Google and Apple did not respond to requests for comment.
Anu Bradford, Columbia University law professor who coined the term ‘Brussels effect’ On the impact of EU law, he said European rules often became global standards because it was easier for companies to apply them across their entire organization rather than a single geographic area.
“Everyone is watching DMA, whether it’s leading tech companies, their competitors or foreign governments,” said Ms Bradford, referring to the Digital Markets Act. “It is possible that even the US Congress will now conclude that they are done with surveillance from the sidelines when the EU regulates US technology companies and will move from talk of legislative reform to actual legislation.”
President Biden appointed Lina KhanJonathan Kanter, a prominent Amazon critic, for leading the Federal Trade Commission and an attorney critical of the tech giant, for heading the Justice Department’s antitrust division.
But efforts to change US antitrust laws are progressing slowly. Congressional committees have passed bills that would prevent technology platforms from favoring their own products or buying smaller companies. It is unclear whether the measures have enough support to pass the full House and Senate.
European regulators are now facing the imposition of the new law. The General Data Protection Regulation (GDPR) has been criticized for lack of enforcement.
The European Commission, the bloc’s executive branch, will have to appoint dozens of new employees to investigate tech companies. Years of litigation are expected to continue as companies file lawsuits for future penalties issued as a result of the new law.
“The gatekeepers, they will not be without defences,” said Mr Fengy, an antitrust lawyer in Brussels.
David McCabe Contributed to reporting from Washington.
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