Why Big Tech won’t run wild in Europe

When Ursula von der Leyen took over as president of the European Commission in late 2019, she clearly stated her top priorities would be battling climate change and improving another part of daily life that many think is out of control – the digital environment.

Along with the rest of the world, the commission she heads – which administers the European Union at the direction of the European Parliament and member countries – could not have foreseen that a global pandemic would add additional challenges to the debate and governance that is already enormously complex. Yet like the weather, the parliament and commission have moved inexorably forward. Their determination to rein in Big Tech was demonstrated last month when they announced provisional approval of the Digital Markets Act (DMA), new legislation that will impose a variety of requirements on Big Tech companies classified as “gatekeepers”.

The legislation text still needs to be finalized at the technical level and checked by “lawyer-linguists”, then receive final approval, said an announcement from the parliament.

“Faced with big online platforms behaving like they were ‘too big to care’, Europe has put its foot down,” said Thierry Breton, one of the top digital officials in the European Commission. “We are putting an end to the so-called Wild West dominating our information space – a new framework that can become a reference for democracies worldwide.”

Throughout 16 months of talks, representatives from the European Parliament and Commission hammered out specifics of a far-reaching law that sets firm boundaries on the biggest tech companies. The regulations will affect app stores, online advertising, e-commerce, messaging services and other everyday digital tools. A European Parliament announcement said the new rules target “large companies providing so-called ‘core platform services’ most prone to unfair business practices, such as social networks or search engines, with a market capitalization of at least 75 billion euros or an annual turnover of 7.5 billion”.

“Designated as ‘gatekeepers’, these companies provide certain services such as browsers, messengers or social media that have at least 45 million monthly end users in the EU and 10,000 annual business users,” said the announcement.

In addition to having huge revenues and user numbers, a “gatekeeper” company must “control one or more core platform service in at least three member states” said a commission news release. Those core services include “marketplaces, app stores, search engines, social networking, cloud services, advertising services, voice assistants and web browsers”.

Small and medium-sized companies “are exempt from being identified as gatekeepers, apart from in exceptional cases,” said the press release.

Among possibly others, Google, Apple, Amazon, Facebook and Microsoft all clearly meet the “gatekeeper” criteria, which is hardly surprising. It’s no secret that they are indeed the main targets of the legislation.

“The Digital Markets Act puts an end to the ever-increasing dominance of Big Tech companies,” said Andreas Schwab, a member of the European Parliament from Germany. “From now on, they must show that they also allow for fair competition on the Internet.”

What that means in practical terms is that big messaging services such as Whatsapp, Facebook Messenger and Apple’s iMessage will have to open up and interoperate with smaller messaging platforms. The mission could pose an enormous technical challenge as highly secure encryption and interoperability are by definition at odds with one another.

Another provision of the new DMA says that “combining personal data for targeted advertising will only be allowed with explicit consent” from individual consumers and internet users.

Some examples of the potential impact of the new law include a requirement for Apple to allow alternatives to its App Store for downloading apps and allow payment methods for the App Store other than Apple’s own.

As well, Google and Meta, parent company of Facebook and Instagram, will likely no longer be able to offer targeted ads across multiple platforms that use data gathered as users move between services owned by the same company. An example would be that data gathered in Google search could not be used by YouTube, which is owned by Google. Amazon will be barred from using data collected from outside sellers that is then used to offer products that compete with those same sellers, a practice already the subject of a separate EU antitrust investigation.

If a “gatekeeper” does not comply with the rules, it is liable for fines of up to 10 percent of its total worldwide revenue in the preceding financial year and 20 percent in case of repeated infringements.

“In case of systematic infringements, the commission may ban them from acquiring other companies for a certain time,” the announcement said.

While they are still evaluating the implications, it’s not surprising that Big Tech companies lobbied against the new rules and have now spoken out against them. Their defence is more of the usual: alleging the requirements would diminish innovation, threaten intellectual property rights and could compromise user privacy. Yet critics say those are the very problems with Big Tech as it buys competitors to quash competition, develops invasive personal profiles for ad targeting and erects walls that exclude smaller companies.

Surely lowering those walls will help encourage new breakthroughs that use the power of digital technology to improve our lives. Flooded by digital overload, many of us yearn for improved quality and ethics in the digital experience, not a greater quantity of the same.As the French minister for the digital economy Cédric O said, the DMA will actually drive improvements and benefits.

“More competition fosters more innovation and this is precisely what will happen,” he said.

Jon Van Housen and Mariella Radaelli are international veteran journalists based in Italy

• Europe