Apple, Amazon, Meta and Google targeted by landmark EU legislation | Science and technology news
Apple, Amazon, Meta and Google are among the tech giants whose global operations could be forced to change due to a landmark new European Union law.
The European Council and Parliament announced the agreement on the Digital Markets Act (DMA) late Thursday evening, ushering in a new era of enforcement against tech companies.
It comes during President Biden’s visit to Brussels, during which the US and EU agreed on measures Reduce Europe’s dependence on Russian energy and further Privacy Rights.
It is aimed at so-called “gatekeeper” companies: companies with an annual turnover of at least €7.5 billion (£6.2 billion) and at least 45 million monthly end users and 10,000 business users in the EU.
In a concession reportedly welcomed by the US, the threshold for defining a gatekeeper was kept low enough to include both European and American companies.
Companies covered by the DMA have been issued a declarative list of “dos and don’ts” they must comply with.
The law requires gatekeepers to:
- Ensure users can unsubscribe from core platform services similar to other subscriptions
- Your versions of the most important software (e.g. web browsers) do not need to be preset during installation
- Make sure the basic features of their instant messaging services are interoperable with others
- Allowing app developers fair access to additional functionalities of smartphones (e.g. NFC chip)
- Give sellers access to marketing and advertising performance data on their platform
- Inform the European Commission about your acquisitions and mergers
The law prohibits gatekeepers from:
- Valuing one’s own products or services above those of others (self-preference)
- Reuse of private data collected during one service for the purpose of another service
- Create unfair conditions for business users
- Preinstall certain software applications
- Require app developers to use certain services (e.g. payment systems or identity providers) to get listed in app stores
Companies that breach the rules could be fined 10% of their global turnover for a first breach and 20% for each repeat breach, although the Commission can decide to limit fines to just 1%.
In cases where an offender “systematically breaches the rules”, defined as three breaches in eight years, the law allows the European Commission to impose “behavioural or structural remedial measures”.
The DMA now has to be formally approved by the European Parliament and the responsible ministers of the member states.
It is expected to be approved within the next six months, completing one of the fastest pieces of legislation the bloc has ever put together, having only been proposed in December 2020.
How much power does that give the EU?
Dozens of antitrust cases are pending against the big tech giants around the world, despite the US and EU being the most powerful jurisdictions.
The EU’s largest anti-trust fine to date was imposed in 2018 Google was hit for €4.34bn (£3.8bn). Forcing phone makers to preinstall apps like Google Search and Chrome to shut out other search engines and web browsers.
The company is is still fighting this penaltywhich accounted for just over 3.7% of its global sales that year, but the real threat to the business has been the impact on future revenue if smartphones without get into the hands of consumers Google Apps already installed.
But that threat is dwarfed by cases in the US where monopoly and competition laws allow the government to force companies to divest and restructure if they are believed to change the market to their liking.
The DMA gives the EU similar powers by allowing the European Commission to impose structural remedial measures on gatekeepers who break the law three times in eight years.
It will be enforced solely by the European Commission on a federal basis and not by the regulators in each member state, ensuring a “high level of harmonization in the single market”, according to the announcement.
How will this affect the tech giants?
The DMA lays out Europe’s approach to several major competition controversies, but they all revolve around how the biggest tech companies operate their platforms, be they retail platforms like Amazon or the Apple App Store.
It requires WhatsApp and iMessage to share a basic level of interoperability, such as potentially forcing WhatsApp to include the ability to send unencrypted SMS messages.
In addition, Apple would have to allow payment options outside of the App Store, which the company was involved with a series of lengthy legal battles at Fortnite maker Epic Games, for example.
A spokesperson for Apple said: “We remain concerned that some provisions of the DMA will create unnecessary privacy and security vulnerabilities for our users, while others prohibit us from charging for intellectual property in which we invest heavily.
“We firmly believe in competition and in creating thriving competitive markets around the world, and we will continue to work with stakeholders across Europe to mitigate these vulnerabilities,” they added.
A spokesman for Amazon said the company is reviewing what the DMA means for the company, its customers and its partners.
Meta declined to comment.
Sky News has not received a response from Google.