European regulators have come to an agreement on major competition rules that could force the world’s biggest tech platforms, including Google, Apple, Facebook, Amazon and Microsoft, to reshape big chunks of their business.
Driving the news: Negotiations over the Digital Markets Act, which aims to address what the European Union sees as a lack of competition in the digital economy, wrapped up Thursday in Brussels.
- The European Parliament aims to pass the proposal by the summer. Gaining passage for the act, which was first introduced in 2020, is a top priority for current EU president Emmanuel Macron of France, whose term expires soon.
Why it matters: Among many other provisions, the rules …
- Require companies to obtain “explicit consent” to target ads based on personal data.
- Require that instant messaging platforms like Apple’s iMessage and Meta’s WhatsApp exchange messages with smaller services.
- Require large platforms to give users freedom to select a browser, search engine and personal voice assistant of their choice.
What they’re saying: “We have achieved something unprecedented, legislation that paves the way to open, fair, contestable digital markets, so everybody has a fair chance of making it,” Margrethe Vestager, executive vice president at the European Commission, said on Twitter. “The gatekeepers will now have to take responsibility.”
Quick take: Europe is pushing forward with a tough antitrust regime — the remaining votes are considered largely formalities. There’s nothing left to do for Big Tech, which lobbied hard against the DMA, but figure out how to comply.
Details: The DMA identifies digital services that are considered “gatekeepers,” laying out rules, obligations and punishments for companies who break the law.
In order to be subject to the DMA, companies must:
- provide “core platform services” like search engines, social networks, messengers and social media;
- have a market capitalization of at least 75 billion euros ($82.6 billion) or an annual turnover of 7.5 billion euros;
- and have at least 45 million monthly end users in the EU and 10,000 annual business users.
Fines for non-compliance will be up to 10% of global turnover, and 20% for repeat infringements. The Commission may also ban “gatekeeper” companies from acquiring others for a certain amount of time.
The big picture: The U.S. is working on its own tech antitrust proposals in Congress and has ongoing lawsuits against Big Tech.
- But Europe is already going way further, despite U.S. officials’ concerns that the proposals discriminate against U.S. firms.
- Nor have European lawmakers been swayed by fears that moving forward with the DMA would hurt U.S.-EU cooperation on internet policy in the face of increasingly autocratic Russian and Chinese regimes.
What they’re saying: “It’s been a very, very difficult debate,” Guido Lobrano, senior vice president and director general for Europe for the Information Technology and Industry Council, which represents tech companies, told Axios.
- “It’s regulation that targets firms, rather than anti-competitive business practices, which we think is a really bad precedent to set,” Garrett Workman, senior director of European Affairs at the U.S. Chamber of Commerce, told Axios.
- “While we support many of the DMA’s ambitions around consumer choice and interoperability, we remain concerned that some of the rules could reduce innovation and the choice available to Europeans,” a Google spokesperson said in a statement. The company will “now take time to study the final text and work with regulators to implement it.”
Flashback: When the General Data Protection Regulation, Europe’s privacy law, passed in 2016, companies had 24 months to comply.
- This time, companies will have just six months to figure out compliance once the legal text of the DMA is finalized and passed by Parliament.
- The European Commission should work with companies deemed gatekeepers so they know how to follow the law without being sued or fined, Workman said: “Companies want to comply, but it’s not entirely clear how in all instances.”
The intrigue: A number of U.S. companies are in support of the DMA, including Mozilla and Microsoft, along with medium-sized companies like Yelp and Genius.
- “We quite like the idea that the DMA is going to give consumers and businesses more freedom to deploy the software of their choice, use more alternatives and not be locked into the Big Tech silos,” Owen Bennett, senior public policy manager at Mozilla, told Axios.
Meanwhile, representatives for Big Tech argue that Russia’s invasion of Ukraine and the role of technology in the conflict has underscored the need for more cooperation between the U.S. and the EU on international technology policy.
- “If an international conflict with massive cybersecurity consequences couldn’t bring the industry together with world leaders, nothing will,” Carl Holshouser, senior vice president of TechNet, which represents senior executives from large tech companies, told Axios.
What’s next: The European Commission must finalize exactly how it will enforce the DMA, and specify which EU government body will oversee that work.
- European regulators are still deliberating specifics of another major set of rules called the Digital Services Act, which will govern how large tech platforms handle illegal online content.