The EU Passes Legislation to Regulate Apple, Google, And Other Big Tech Firms
In the United States, both sides of the political spectrum have been expressing concern over the actions of Big Tech. Although, they can’t agree on why we should be concerned. In Europe, parties have come together to pass the Digital Services Package (DSP), a bundle of legislation that will force companies like Apple, Google, Facebook, and Amazon to adjust their practices in myriad ways. Some have pointed to the DSP as a model for future US legislation, but it goes much further than the typical business-friendly legislation in the US.
The Digital Services Package consists of two parts: the Digital Markets Act and the Digital Services Act. The legislation was proposed in 2020 and has now been adopted by the European Commission with the aim of creating a comprehensive rulebook for tech companies that will preserve privacy and choice in the marketplace. For the companies it targets, the Digital Services Package is going to mean a lot of regulatory monitoring.
The Digital Markets Act (DMA) is all about regulating the companies that operate “core platform services” like app stores, search engines, and more. Small companies won’t have to fret over the provisions in the DMA, but big tech will. What marks a company for DMA regulation? The legislation creates a legal framework for so-called “Gatekeepers,” which have a significant impact on the EU market, operate important consumer gateways, and have a large enough market share that they aren’t going anywhere. The EU expects to designate 10-15 gatekeepers, along with smaller firms in lesser roles as “emerging gatekeepers” that could become dominant in the near future.
Gatekeepers will have a range of obligations to ensure consumer welfare and the fairness of digital markets. For example, gatekeepers will not be allowed to leverage their dominant market position to give unfair preference to their other products and services — something that could irk Google and Facebook. Advertising is also a major focus of the DMA, which connects it with the General Data Protection Regulation (GDPR) to ensure data portability and privacy.
The Digital Services Act (DSA) is similar to the DMA but it focuses on the behavior of online “intermediaries” like internet service providers, cloud services, messaging, and social networks. It seeks to regulate the role of these companies in connecting consumers to online services and content.
The DSA requires designated firms to maintain regulatory compliance officers, take action to remove illegal content, and work to protect the rights of consumers. For example, users can flag content as illegal or harmful, or even file complaints about a platform’s moderation policy. It also bans some of the more shady methods of ad targeting and user tracking. However, it does not set EU-wide rules about what kinds of content are illegal — it’s just a framework to ensure users have tools to protect themselves.
The EU’s new laws have teeth, too. Gatekeepers that violate the DMA can be fined between four and 20 percent of the company’s worldwide annual revenue. Violations of the DSA can be punished with fines of up to six percent of annual revenue. The DMA will be enforceable in six months, and the DSA will be live on January 1, 2024.
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