News & Analysis

EU To Rein In Big Tech Giants

The European Union is set to apply pro-competition rules on six global tech giants including Amazon, Apple, Meta and Alphabet

In what appears to be a tightening of antitrust laws, the European Union has announced that six tech giants would have to operate under a new set of proactive, pro-competition rules that would define how they operate core platform services. The Commission says 22 platform services run by the six big tech businesses will fall under the Digital Markets Act (DMA). 

The six companies are Alphabet (parent company of Google), Amazon, Apple, ByteDance, Meta (parent of Facebook) and Microsoft. The total list of 22 entities include four social networks, six intermediation services, three ads delivery systems, two browsers, three operating systems, two number-independent interpersonal communication services, one search engine and one video sharing platform. 

Companies and services that are impacted

The four social networks are Facebook, Instagram, LinkedIn and TikTok, intermediation services include Google Play, Google Maps, Google Shopping, Amazon Marketplace, iOS App Store and the Meta Marketplace. The ads delivery systems are Google, Amazon and Meta while Chrome and Safari are the two browsers.

Google Android, iOS and Windows PC are the three operating systems while Whatsapp and Facebook Messenger are the communication service. Google is the lone search engine on the list and YouTube (also owned by Alphabet) is the video sharing platform that would be required to adhere by the DMA for operating in Europe. 

Who qualifies for regulation and when they start

Per the DMA, gatekeepers with a turnover of 7.5 billion euros over the past three financial years or having more than 45 million active local users fall under their ambit. The Commission also set a 75 billion euros market cap as one of the thresholds though it does boast a degree of discretion in targeting the platforms. 

The regulations were in force from May once the EU lawmakers agreed to it earlier this year following discussions between the EU Parliament and the Council on the Commission’s 2020 proposal to oversee digital competition. Originally, Samsung was expected to be a part of this list but in its place ByteDance becomes the only non-US tech giant on it.  

Experts note that two other services that were surprisingly omitted include Gmail from Google and its rival from Microsoft. In fact, no webmail service finds mention in the EU list and the same is the case with cloud storage platforms where Amazon, Microsoft and Google are battling for supremacy. 

The dos and don’ts of the DMA provisions

Some of the DMA provisions on core platform services include bans on self-preferencing and on app stores preventing installations from rival stores. It says gatekeepers cannot ban business users from offering or promoting competing services and are obligated to share with them data that their platform generates. 

In addition, there are data portability and service interoperability requirements such as specific obligations for messaging giants and screen-style obligations for operating systems, browsers, search engines and virtual assistants. DMA also bans gatekeepers from tracking and profiling users for ad targeting without proper consent. 

It also stops them from disallowing users from uninstalling gatekeeper preloads. In the words of Thierry Breton, EU’s internal market commissioner, tech giants have used their market power to give their own products and services an unfair advantage and hold back competitors. These practices distort competition, undermine free consumer choice and hold back SME innovation arising from Web 4.0 and virtual worlds. 

Penalties for a breach of the DMA could entail up to 10% of annual global turnover that could go up to 20% for severe repeat offenses. “It is high time Europe sets the rules of the game upfront, providing a clear enforceable legal framework to foster innovation, competition and resilience of the Single Market,” the official said at a conference in Estonia. 

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