EU Digital Markets Act: Big changes on the way for Big Tech

25 Mar 2022

Image: © jpgon/Stock.adobe.com

Now finalised, the new EU rules for digital markets aim to ‘put an end to the ever-increasing dominance of Big Tech’.

The EU has finally agreed on landmark new rules to crack down on anti-competitive behaviour by Big Tech and level the playing field in digital markets, in a deal that is expected to set global standards.

Yesterday evening (24 March), negotiators from the European Parliament, Commission and Council agreed on the anticipated Digital Markets Act (DMA) to limit the powers of some of the world’s biggest online platforms, including Meta, Apple and Google.

Future Human

The DMA, which passed in the European Parliament with an overwhelming majority in December, will give the EU powers to blacklist certain practices used by large tech platforms providing core services such as browsers, social media and messaging, as well as sanction non-compliant behaviour.

Tech companies operating in the EU with a market capitalisation of more than €75bn or annual turnover of €7.5bn are included in the scope of the DMA. Additionally, they must fit the description of ‘gatekeeper’ companies that provide core services with at least 45m monthly end users in the EU and 10,000 annual business users.

Interoperability and data consent

Perhaps one of the most radical moves in the DMA is the requirement for interoperability between messaging apps such as WhatsApp, Facebook Messenger, iMessage and other smaller apps, which would allow users on any of these apps to communicate with each other through text, voice or video.

The EU argues that this will give users of messaging services, small and big, more choice to decide which platform they want to use without having to use all of them or just one of them to keep in touch with others.

For group chats, the requirement will be rolled out over a period of four years. EU commissioner for the internal market Thierry Breton cited “technical reasons”, saying that “some functionalities are easier to implement than others”.

The new DMA rules would ensure that combining personal data from different sources for targeted advertising will only be allowed when tech companies have the explicit consent of the consumer. Users will also be given greater choice in deciding their browser, virtual assistant and search engine.

The European Commission, which is now charged with the difficult task of implementing these rules, can sanction any tech company that does not comply with fines of up to 10pc of its worldwide turnover in the preceding financial year, and up to 20pc in case of repeated infringements.

For companies that are seen to make “systemic infringements”, the Commission will have the power to ban them from acquiring other companies “for a certain time”.

‘Taking back control’

At a press conference today, EU leaders hailed the DMA as rules that will usher in a new era of tech regulation with ripple effects across the world.

Andreas Schwab, rapporteur from the European Parliament’s internal market and consumer protection committee, said that the DMA has been a goal of the Parliament for many years now and “puts an end to the ever-increasing dominance of Big Tech”.

“The law avoids any form of overregulation for small businesses. App developers will get completely new opportunities, small businesses will get more access to business-relevant data and the online advertising market will become fairer,” he said.

Margrethe Vestager, the EU’s competition chief, justified the strict new rules by saying that regulation and competition “work hand-in-hand” in many other sectors such as banking and energy, and that the digital market needs its own “rules of the game”.

“When things become systemic, we need regulation to come in,” added Vestager, who has been taking on Big Tech with several antitrust investigations into the likes of Google, Nvidia and Apple.

Breton echoed Vestager’s comments, adding that the digital markets space “used to be the wild west” and that “now we’re taking back control” with the implementation of the DMA.

“The message is clear – everyone is welcome, but everyone must follow the rules,” he said.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com