Tech giants will soon face heavy fines and tight control over their conduct as part of new European Union laws.
The European Commission, the EU’s governing body, on Tuesday introduced two new rules that will affect how Big Tech operates. The region has long been concerned about how powerful other companies have become, and how this is a problem for small firms looking to compete in the European market.
The New Rules
Digital Markets Act
In this context, the new Digital Markets Act aims to address the conduct that closes these markets.
One of the potential changes is putting an end to self-preferencing, if, for example, the app search results in Apple product display options created by the tech giant. The idea is to give younger application developers the same opportunity to be acquired and selected by consumers.
Other practical changes include: companies like Apple and Google will have to allow users to uninstall apps that came with their devices initially, and performance metrics will also have to be shared for free with advertisers and publishers.
Fine For Violations
Failure to comply could result in a fine of up to 10% of annual revenue.
One EU official, who did not want to be named because of the sensitivity of the issue, told CNBC the EU’s intention is to force solutions that will lead to real change rather than punish those who violate the law on a regular basis.
Remedies can ultimately include forcing companies to break up if they break the rules systematically. The same official stated that the sale of parts of the business would only happen “if there was no other solution available.”
Digital Services Act
In addition, the European Commission has introduced a second law: Digital Services Act. This is designed to deal with illegal and harmful content by asking platforms to remove it immediately. There will also be penalties for companies that do not follow these rules.
EU competition chief Margrethe Vestager said on Tuesday that the two proposals would ultimately achieve two goals. “To ensure that we, as users, have access to a wide selection of secure online products and services. And that businesses operating in Europe can compete as freely and fairly as they do online. ”
The two laws will have to be approved by European governments and lawmakers, but policy experts have suggested that adoption may be faster than usual at EU level.
When Will It Come Into Force?
Vestager told CNBC she hoped the new rules would be adopted “as soon as possible” but that could take two years.
The EU has been at the forefront of technology regulation, with new data privacy laws introduced in 2018. However, experts believe that the latest step is even more important as it challenges the hearts of the business giants of tech giants.
Big Tech has expressed concern over the new rules in continuing its launch. Google, for example, was concerned about the hope that recent legislation would prevent it from combining certain information, such as a restaurant, its menu and a booking option.
At the same time, other parts of the world are taking similar steps into addressing strict technical legislation. The U.K. announced on Tuesday that tech giants could be fined up to £ 18 million ($ 24 million) or 10% of their annual income, whichever is higher, if they did not immediately take up illegal content.
In the United States, the Federal Trade Commission is investigating how social media companies use personal information and conduct user engagement. It also filed a lawsuit against Facebook for alleged independence.
EU activity on technology regulation has previously raised some concerns in the U.S., but Vestager believes the season is different.
He told CNBC that the latest move was part of a “global discussion of how to measure things,” adding that “there is nothing surprising” in the new U.S. counterparts’ laws.
Big Tech Response
Caroline Greer, director of public relations and public policy at TikTok in Brussels, said: “It is clear that the platforms play an important role in society, and it is right that they are transparent and accountable.”
“For TikTok, security is not something that is tied up or something good you have, it is our first place. We look forward to reviewing the Commission’s submissions today and discuss the opportunity for this opportunity to strengthen the way platforms keep their communities safe online. ”
Separately, Sinead McSweeney, VP of public policy at Twitter EMEA, said: “Twitter is committed to advancing Open Internet policies and keeping people safe online.”
“We welcome the publication of the European Commission on the Digital Service’s Act and the Digital Markets Act today, which reaches a critical political level – in Europe and around the world.”
One of the potential changes is putting an end to self-preferencing.
Companies like Apple and Google will also have to allow users to uninstall apps that came with their devices.
Failure to comply could result in a fine of up to 10% of corporate profits annually.
Remedies can ultimately include forcing companies to disinvest if they breach the rules systematically.