Europe passes sweeping antitrust laws targeting America's Big Tech
Google, Facebook, Amazon and the rest stand to lose – if rules are actually enforced
Updated After nearly two years of legal wrangling, the European Parliament on Tuesday passed the Digital Markets Act and the Digital Services Act, teeing up a showdown between the continent and US tech giants.
With the two sets of laws approved, the measures move to the European Council for passage. If green-lit, as is expected over the next few months, the DMA and DSA will go to EU nations to implement and put into action. We note that neither act will be enforceable until January 1, 2024 at the earliest.
Both acts place restrictions on the behavior of large tech companies. The DMA aims to rein in the power of "gatekeepers" that are too large to be avoided, while the DSA operates under the assumption that "what is illegal offline, should be illegal online," as the EU Parliament describes it.
Gatekeeper companies include Amazon, Google, and Facebook, which control access to platforms that are used by third-party businesses. The DMA will regulate these souks and social networks by preventing them from curtailing access to their platforms or prioritizing their own goods and services over those of competitors.
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The DSA "sets clear obligations for digital service providers, such as social media or marketplaces, to tackle the spread of illegal content, online disinformation and other societal risks," according to a statement issued by the EU Parliament.
But do the acts have teeth?
The European Consumer Organization (BEUC) sent a letter to the EU Parliament late last month expressing concern that nations may not have the staff, skills, and oomph to ensure Big Tech actually obeys the rules.
"If the [European] Commission lacks the necessary resources and in-house expertise to ensure compliance, big tech companies would be unlikely to take seriously their responsibilities to comply," the letter argued.
Andreas Schwab, a German member of the EU Parliament who introduced the DMA, expressed similar concerns. "We need proper supervision to make sure that the regulatory dialogue works. It is only once we have a dialogue of equals that we will be able to get the respect the EU deserves; and this, we owe to our citizens and businesses."
BEUC deputy director general Ursula Pachl said much of the success or failure of the acts comes not from the EU Parliament or EC, but EU nations. "Member states must now also provide the Commission with the necessary enforcement resources to step in the moment there is foul play," Pachl said.
We note that the Parliament stated on Tuesday:
To ensure that the new rules on the DMA are properly implemented and in line with the dynamic digital sector, the Commission can carry out market investigations. If a gatekeeper does not comply with the rules, the Commission can impose fines of up to 10% of its total worldwide turnover in the preceding financial year, or up to 20% in case of repeated non-compliance.
The Register has reached out to the BEUC and Schwab to learn more about the specific roadblocks to enforcement and will update upon reply. ®
Updated to add
European commissioner Thierry Breton has shared some details on how he thinks the enforcement of the rules will play out.
He argued that, with this legislation in place, it will be easier to get the attention of internet giants and compel them to obey the law:
Each platform, big and small, will have to have a legal representative in Europe. So we will now know who to call if there is a problem.
And each Member State will have a regulator with the necessary powers to enforce the rules. Orders sent by national public authorities will be more effective to tackle illegal content and get information about the wrongdoer, in particular cross-borders.
We will also rely on a network of trusted flaggers, such as NGOs, hotlines or rightsholders, to ensure that platforms react to the flagged illegal content as a priority. Class actions against platforms breaking the rules will be made easier, and damaged consumers can be compensated.
He also said Europe could charge large web giants fees to fund regulatory efforts:
Under the DSA, the Commission will be able to apply supervisory fees on very large platforms and very large online search engines to cover the costs of these supervisory and enforcement tasks.
Within the Commission, my teams will be responsible for designating these platforms, monitoring the application of the new rules and enforcing them – including new powers to investigate and sanction platforms.
The money collected will be used to help build a watchdog of a 100-plus full-time staffers to investigate the titans of tech, we're told.