EU unveils new regulatory proposals designed to rein in America’s Big Tech companies

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December 10—The European Commission, the European Union’s executive arm, unveiled new regulatory proposals to modify the behavior of America’s Big Tech giants. The organization’s digital law recommendations would require Apple and Google to make their device ecosystems friendlier to their smaller rivals. It has also drawn up new legislation regarding how companies like Facebook deal with illegal and misleading content.

The bloc’s proposals include significant penalties for violators, including massive fines and potential organizational breakups.

The Digital Markets Act

The EU’s Digital Markets Act (DMA) is designed to make Europe’s digital marketplace fairer by protecting consumers and cracking down on monopolistic practices.

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The DMA would label certain companies as “gatekeepers” if their market capitalization and user base size make them significant regional operators. The regulation calls for gatekeepers to abide by specific rules to keep them from disadvantaging burgeoning digital providers. It would do that by prohibiting firms from promoting their services of those offered by their competitors.

The legislation would theoretically prevent Apple and Google from positioning their offerings more favorably than third-party services.

The bloc’s new rules would also force large providers to let consumers uninstall any apps preloaded on the devices. That regulation is intended to give Europeans greater control over their devices and more access to emerging digital products. Similarly, the DMA would prevent gatekeepers requiring that user-provider transactions go through their platforms.

As it happens, Epic Games filed a lawsuit against Google and Apple for engaging in that practice earlier this year.

The DMA proposal stipulates that gatekeepers must give businesses access to data that consumers generate when using their products. It would mandate that large providers give third-parties the ability to confirm the status of advertisements shown on their platforms independently.

The Digital Services Act

The EU’s other Big Tech regulatory proposal is called the Digital Services Act (DSA). The legislation would enable the bloc’s watchdogs to act against providers for hosting disinformation and illegal content. Though the DSA would obligate internet service providers and web hosts to follow new rules, it features language specifically addressing “very large online platforms.”

In other words, the legislation aims to establish new rules for companies like Google, Facebook, and Twitter.

If enacted, the EU’s framework would require firms to quickly remove and report harmful content once identified. It would compel companies to cooperate with local authorities in their investigations into the prohibited material. The DSA would also force platforms to safeguard Europeans’ freedom of speech from abusive takedown notices.

The proposal also aims to make very large providers more accountable and transparent in their activities. Under the DSA, Big Tech corporations would submit to external risk auditing, share data with researchers and authorities, and adhere to a code of conduct. The new rules would also force massive platforms to make their advertising policies clear to users.

Recently, French authorities levied $163 million in fines against Google and Amazon for failing to clarify marketing methodologies.

Adoption Timeline and Penalties

The EU Council and the European Parliament will review the European Commission’s latest policy proposals. CNBC noted the appraisal process could take two years. That means Amazon, Apple, Google, and Facebook will not have to make changes to their products and services right away.

That said, the DSA and DMA will give America’s Big Giants a significant compliance incentive if made into law.

The proposed regulations would penalize repeat offenders with fines totaling 10 percent of their annual revenue. The legislation would also give EU watchdogs the authority to break up companies that violate the bloc’s digital regulations.

In the past, the U.S.’s largest technology companies have effectively shrugged off large financial penalties because of their sizeable revenues. But being dismantled is a much more serious threat that might prompt significant operational overhauls. As a result, EU regulators may permanently alter the way several leading American companies operate.

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