The Associated Press reports that “the European Union on Wednesday targeted Apple, Amazon, Microsoft, Google parent Alphabet, Facebook owner Meta and TikTok parent ByteDance under new digital rules aimed at reining in the market power of online companies.
“The six companies were classed as online ‘gatekeepers’ that must face the highest level of scrutiny under the 27-nation bloc’s Digital Markets Act … The EU’s executive Commission said digital platforms can be listed as gatekeepers if they act as key gateways between businesses and consumers by providing ‘core platform services’.”
Among the new rules being established by the EU is one that says that “platforms are banned from ranking their own products or services higher than their rivals in search results. So, Amazon isn’t allowed to make its own-brand products easier to find than those from third-party merchants.”
In addition, “Online services can’t combine a user’s personal data to build up a profile for targeted advertising, unless consent is explicitly given.”
The price of breaking the rules could be stiff: “Violations could result in fines of up to 10% of a company’s annual global revenue, and up to 20% for repeat offenders, or even a breakup of the company.”
The AP writes that “the act amounts to a list of do’s and don’ts that seeks to prevent tech giants from cornering new digital markets, with the threat of whopping fines or even the possibility of a company breakup.
“It’s part of a sweeping update to the EU’s digital rulebook that’s starting to take force this year, and comes weeks after a companion package of rules aimed at keeping internet users safe, the Digital Services Act, started kicking in.”
KC’s View:
Yikes.
Perhaps the most impressive part of these rules is the we-mean-business nature of the penalties. The EU has been far more aggressive in trying to regulate big tech than the US, and it seems far more ambitious in its willingness to consider the repercussions of not regulating these companies and the technologies they promulgate.
I’m sure there will be litigation and lobbying as at least some of these companies decide that it is better to invest in lawyers’ fees than in fixing the system so it complies with the rules. But the EU seems to have a backbone when it comes to this stuff, so I’m not sure how successful appeals will be.
The better question is whether the US will – or should – use the EU as a model for how we should be regulating big tech.
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