The EU agreed on Thursday to one of the world’s most far-reaching laws to address the power of the biggest tech companies, potentially reshaping app stores, online advertising, e-commerce, messaging services and other everyday digital tools.
The law, called the Digital Markets Act, is the most sweeping piece of digital policy since the bloc put the world’s toughest rules to protect people’s online data into effect in 2018. The legislation is aimed at stopping the largest tech platforms from using their interlocking services and considerable resources to box in users and squash emerging rivals, creating room for new entrants and fostering more competition.
What that means practically is that companies like Google will no longer be able to collect data from different services to offer targeted ads without users’ consent and that Apple may have to allow alternatives to its App Store on iPhones and iPads.
Violators of the law, which will take effect as early as later this year, could face penalties of up to 20 per cent of their global revenue — which could reach into the tens of billions of dollars — for repeat offenses.
The Digital Markets Act is part of a one-two punch by European regulators. As early as next month, the EU is expected to reach an agreement on a law that would force social media companies such as Meta, the owner of Facebook and Instagram, to police their platforms more aggressively.
With these actions, Europe is cementing its leadership as the most assertive regulator of tech companies such as Apple, Google, Amazon, Meta and Microsoft. European standards are often adopted worldwide, and the latest legislation further raises the bar by potentially bringing the companies under a new era of oversight — just like health care, transportation and banking industries.
“Faced with big online platforms behaving like they were ‘too big to care’, Europe has put its foot down,” said Thierry Breton, one of the top digital officials in the European Commission. “We are putting an end to the so-called Wild West dominating our information space. A new framework that can become a reference for democracies worldwide.”
On Thursday, representatives from the European Parliament and European Council hammered out the last specifics of the law in Brussels. The agreement followed about 16 months of talks — a speedy pace for the E.U. bureaucracy — and sets the stage for a final vote in parliament and among representatives from the 27 countries in the union. That approval is viewed as a formality.
Europe’s moves contrast with the lack of activity in the US. While Republicans and Democrats have held several high-profile congressional hearings to scrutinise Meta, Twitter and others in recent years, and US regulators have filed antitrust cases against Google and Meta, no new federal laws have been passed to address what many see as the tech companies’ power.
The path of the Digital Markets Act faced hurdles. Policymakers dealt with what watchdogs said was one of the fiercest lobbying efforts ever seen in Brussels as industry groups tried to water down the new law. They also brushed aside concerns raised by the Biden administration that the rules unfairly targeted American companies.
Questions remain about how the new law will work in practice. Companies are expected to look for ways to diminish its impact through the courts. And regulators will need new funding to pay for their expanded oversight responsibilities.
New York Times News Service
