Facebook, Google, Apple and Amazon could face multi-billion dollar fines under new EU tech regulations
Big Tech faces historic new regulations in the European Union that include the possibility of multi-billion dollar fines and the dissolution of companies if they don’t comply with the new rules.
Presented on Tuesday, the Digital Services Act and the Digital Markets Act of the European Commission inaugurate a new era of regulation in Europe. They aim to keep technology platforms at a high standard with regard to the content they host and to introduce new pro-competitive measures for online marketplaces.
Both acts must be approved by the European Parliament and the Council of Ministers before entering into force.
“Both proposals have one goal: to ensure that we, the users, have access to a wide choice of secure products and services online,” said Margrethe Vestager, Executive Vice-President of the European Commission and responsible for competition and digital policy. , “And that companies operating in Europe can compete freely and fairly online as they do offline”.
Tech companies could face hefty fines for non-compliance. For the digital services law, a very large online platform could face fines of up to 6% of global revenue for a serious breach of the rules. Breaking the law on digital markets could result in fines of 10% of a company’s worldwide turnover and periodic penalty payments of up to 5% of global turnover.
Read it: Amazon ‘illegally distorted competition’ EU finds as it faces new investigation into Prime competition
Under the Digital Services Act, all online platforms have new responsibilities for the content they host. The rules include the removal of illegal goods, services and content; advertising transparency measures; and the obligation for large platforms to take action against abuse of their systems.
A monitoring structure will also be put in place with the capacity to directly sanction platforms that affect more than 10% of the EU population of 45 million users.
The digital services law is expected to have a direct impact on Alphabet, which owns the world’s two most popular search engines, Google and YouTube, and Facebook, the largest social media network with more than 2.5 billion people. monthly active users.
The Digital Markets Act is targeted regulation against the biggest tech companies – Big Tech – that the bloc calls the “gatekeeper” platforms.
The Commission has defined what constitutes an access control platform without naming any of the companies likely to fall under the new designation – Alphabet GOOG,
and Apple AAPL,
The controllers have achieved an annual turnover in the European Economic Area of 6.5 billion euros or more in the past three years, or a market capitalization of at least 65 billion euros, and provide a basic platform service in at least three Member States. These companies are also expected to have a firmly established and sustainable position in the market.
More: Apple has been hit by privacy complaints from the same digital activist who successfully took on Facebook
The main concern of competition regulators is that gatekeepers manipulate the platforms they host to illegally give preference to their own products and services. This covers user of data, interoperability – the ability of hardware and software systems of different companies to interact – and self-preference.
Pro-competition reforms could prevent, for example, Google from favoring its own price comparison tools on search engine pages – the subject of a complaint made by a group of 135 companies including travel agencies Trivago TRVG,
and Expedia EXPE,
and Yelp YELP Business Review Website,
The Digital Markets Act also forces platforms like Apple to stop preventing users from uninstalling default software and apps, and prevents platforms like Amazon from using data they collect from other merchants to compete with them.
“With harmonized rules, ex ante obligations, better surveillance, swift enforcement and dissuasive sanctions, we will ensure that anyone offering and using digital services in Europe enjoys security, trust, innovation and business opportunities, “said Thierry Breton, European Commissioner. for the domestic market.
The Commission argues that ‘systematic breaches’ of digital markets law by custodians could lead to ‘structural remedies, such as forcing a custodian to sell a business, or parts of it,’ leaving open the possibility of dismantle Big Tech.
Following: Google is the target of these tech companies urging regulators to take action against its “manifest abuse of dominance”
Axel Hefer, managing director of Germany-based hotel reservation site Trivago, told MarketWatch he welcomes the new regulations.
“Our main concern is Google’s Hotel Ads unit, which enjoys significant preferential visibility in search results. That should change, ”Hefer said. “This will allow us to be more competitive on a level playing field, which should lead us to become more competitive and Google Hotel Ads to become less competitive.”
Hefer believes the two new laws will help spur innovation among tech companies in Europe and allow for swift action by regulators, instead of the long and costly investigations of the past – like the four-year struggle for more than $ 13 billion. euros in back taxes in the block said Apple owed Ireland.
“It’s obviously bigger than Trivago, bigger than travel, and there’s a systemic issue that I think is now widely appreciated,” Hefer said. “These market failures will stop in a way that I think is much, much, much more important than our individual problem that we have with Google.”