The European Commission unveiled long-awaited plans on Tuesday to bring order to the digital jungle and curb the power of the big internet giants. With more obligations, stricter supervision, dissuasive fines and, if necessary, the compulsory sale of businesses, the Commission would like to get a better grip on them.
From teleworking and distance learning to shopping and consuming messages to contacting family and friends: everyday life is becoming more and more common in the digital sector. The corona pandemic has accelerated this social trend spectacularly. However, legislation is lagging behind and the Commission wants to put an end to it.
Deputy Chairwoman Margrethe Vestager compared the plans with the first traffic lights that brought order to the streets a hundred years ago after the invention of the car. “With the increase in digital traffic, we now also need rules to bring order out of chaos,” said the Danish politician. “We need to be able to shop safely and trust the news we read. Because what is illegal offline is also online. “
The Commission has produced two pieces of legislation. The first, the so-called Digital Services Act, mainly has a social perspective and builds on the e-commerce directive. It’s now twenty years old and ignored a scenario where some online platforms would get so big and influential. Not only as global hubs in the field of trade, but also as a public space in which information is exchanged.
The text contains rules for removing illegal goods, services and content, obliges platforms to take more measures against the abuse of their systems, and forces them to be more transparent about online advertising and the algorithms used to deliver certain content to users. . The rules apply to everyone, but the Commission wants specific obligations and additional monitoring of platforms that reach more than 10% of the European population. The Commission wants to be able to sanction the really big platforms with fines of up to 6 percent of their worldwide turnover.
The second text, the Digital Markets Act, focuses on business and specifically targets the largest search engines, marketplaces, social networks and other systemic actors. The Commission defines them as “gatekeepers” who have a significant impact on the European market and can seriously distort the competitive environment in the event of unfair trading practices such as the misuse of data from companies operating on these platforms.
The law prohibits a number of unfair practices, such as the inability to remove pre-installed software or apps from users. Violations can result in fines of up to 10 percent of sales. As the ultimate sanction for persistent criminals, the Commission envisages structural measures, such as the compulsory sale of business units. The Commission also wants to be able to carry out targeted market research in order to more quickly identify new potentially anti-competitive practices.
American technology giants in their sights
The Commission does not name any companies. It uses criteria to determine which market players are “systemic”, but it’s clear that US tech giants Google, Amazon, Apple, Microsoft, and Facebook are targeted in Europe, among others. According to a source close to the Commission, Google, Amazon, Facebook, Apple and Microsoft actually meet the criteria developed by the Commission to label a digital player as “systemic” and impose new obligations. Booking, Snapchat, the Chinese players Alibaba and Bytedance (TikTok) as well as the South Korean Samsung are also targeted.
The Commission uses a European turnover of more than 6.5 billion euros or a stock market value of more than 65 billion euros as the threshold value. In addition, the company must be present in at least three Member States and have more than 45 million end users and more than 10,000 companies as users.
Objective of the EU commissioner’s lobbying strategy
Thierry Breton, the EU commissioner responsible for the internal market, assured that the proposals were “not directed against anyone”. “Everyone is welcome in Europe, but larger companies also have to bear more responsibility,” said the Frenchman. Breton is said to be a specific target of Google’s lobbying strategy as it advocates dismantling major tech giants, according to a recent leak in the French weekly Le Point.
The story illustrated the massive lobbying campaign surrounding the legislative package. Since Ursula von der Leyen’s commission was appointed, the Corporate Europe Observatory has held 158 board, cabinet and top-level officials’ meetings with stakeholders, and that’s just the tip of the iceberg, according to the lobby watchdog. The fight isn’t over either. Finally, the proposals now have to be approved by the Member States and the European Parliament.
Google “concerned” about new European laws
Google is “concerned” that the European Commission would like to hit “a handful of companies” with its proposals. “We are concerned that the proposals appear to target a handful of businesses and make it difficult to develop new products to support small businesses in Europe,” said Karan Bhatia, Google’s vice president of institutional relations, in a press release.
The Executive Vice President Myron Brilliant of the US Chamber of Commerce also believes that the commission wants to target US concerns “almost exclusively”. “It seems that Europe wants to punish successful companies that have made large investments in Europe’s economic growth and recovery.”
Facebook, on the other hand, is more positive, hoping that Europe will take action against Apple, and praises the proposals that are “on the right track to keep the good on the Internet”. For example, the social network is content with harmonizing the rules on illegal content.
At the same time, Facebook hopes that the European initiative “Apple sets limits”. “Apple controls an entire ecosystem, from the device to the app store to apps, and uses this power to harm developers and consumers as well as large platforms like Facebook,” said a spokesman in Brussels.