Negotiators from the European Parliament and EU Member States have agreed on a landmark law to curb the market dominance of US big tech giants such as Google, Meta, Amazon and Apple.
Meeting in Brussels, the lawmakers nailed down a long list of do’s and don’ts that will single out the world’s most iconic web giants as internet “gatekeepers” subject to special rules.
The “Digital Markets Act” (DMA) has sped through the bloc’s legislative procedures and is designed to protect consumers and give rivals a better chance to survive against the world’s powerful tech juggernauts.
German Member of the European Parliament (MEP) Andreas Schwab, who led the negotiations for the European Parliament, intimated that “The agreement ushers in a new era of tech regulation worldwide.
“The Digital Markets Act puts an end to the ever-increasing dominance of Big Tech companies.”
German MEP, Andreas Schwab
Purpose of the Digital Markets Act
The main point of the Law is to avert the years of procedures and court battles needed to punish Big Tech’s monopolistic behaviour, where cases can end with huge fines but little change in how the giants do business.
The Law, once implemented, will give Brussels unprecedented authority to keep an eye on decisions by the giants, especially when they pull out the chequebook to buy up promising startups.
“The gatekeepers, they now have to take responsibility,” the EU’s Competition Supremo, Margrethe Vestager said, pointing out that “A number of things they can do, a number of things they can’t do, and that, of course, gives everyone a fair chance”.
The content of the Law
The law contains about 20 rules that in many cases target practices by Big Tech that have gone against the Bloc’s rules on competition, which Brussels has struggled to enforce.
The DMA imposed numerous obligations on Big Tech, including forcing Apple to open up its App Store to alternative payment systems. This is a demand that the iPhone maker has opposed fiercely, most notably in its feud with Epic games, the maker of Fortnite.
Google will be asked to clearly offer users of Android-run smartphones alternatives to its search engine, the Google Maps app or its Chrome browser.
Apple would also be forced to loosen its grip on the iPhone, with users allowed to uninstall its Safari web browser and other company-imposed apps that users cannot currently delete.
In a statement, Apple swiftly expressed regret over the law, saying it is “concerned that some provisions of the DMA will create unnecessary privacy and security vulnerabilities for our users”.
After a furious campaign by influential MEPs, the law also forced messaging services such as Meta-owned WhatsApp to make themselves available to users on other services such as Signal or Apple’s iMessage, and vice-versa.
France, which holds the EU Presidency and negotiated on behalf of the Bloc’s 27 Member States, disclosed that the law would deliver “concrete impacts on the lives of European citizens”.
France’s Digital Affairs Minister, Cedric O., “We are talking about the goods you buy online, the smartphone you use every day, and the services you use every day”.
To Comply or Challenge?
Violation of the rules could lead to fines as high as 10 percent of a company’s annual global sales and even 20 percent for repeat offenders.
Lawyer Katrin Schallenberg, a Partner at Clifford Chance pointed out that the DMA “will have a profound impact on the way some gatekeepers’ operations are currently conducted”.
“Clearly, companies affected… are already working on ways to comply with or even challenge the regulation.”
Lawyer Katrin Schallenberg, a Partner at Clifford Chance
The Big Tech companies lobbied hard against the new rules and the firms have been defended in Washington, where it is alleged that the new law unfairly targets US companies.
With the deal now reached by negotiators, the DMA now faces final votes in a full session of the European Parliament as well as by Ministers from the EU’s 27 Member States.
The rules could come into place starting on January 1, 2023, though tech companies are asking for more time to implement the law.
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