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Monday, December 5, 2022

EU’s Landmark Digital Act takes aim at the power of big tech

In a landmark decision on Thursday, the European Union adopted one of the world’s most far-reaching laws to address the power of the world’s largest technology companies, with the potential to reshape app stores, online advertising, e-commerce, messaging services, and other commonly used digital tools.

The Digital Markets Act, as it is known, is the most comprehensive piece of digital legislation to be passed by the EU since the region implemented the world’s strictest laws for protecting people’s personal data in 2018. To prevent the major digital platforms from using their interlocking services and significant resources to box in customers and crush rising competitors, the regulation is intended to provide way for new entrants and encourage greater competition.

What this means in practise is that companies such as Google will no longer be able to collect data from different services in order to serve targeted advertisements to users without their consent, and Apple may be forced to allow third-party app stores on iPhones and iPads in order to remain competitive. The regulation, which will take effect as early as later this year, may subject violators to fines of up to 20 percent of their worldwide income — which could amount to hundreds of millions of dollars for a first infraction and hundreds of millions of dollars for a second offence.

The Digital Markets Act is part of a two-pronged attack by European authorities on the digital market. Several European Union member states are poised to achieve an agreement on a bill that will require social media firms such as Meta, the owner of Facebook and Instagram, to police their platforms more vigorously as early as next month.

Europe is consolidating its position as the most forceful regulator of technology giants such as Apple, Google, Amazon, Meta, and Microsoft as a result of these moves. European norms are often followed throughout the globe, and the recent law sets the bar even higher by possibly subjecting the corporations to a new age of scrutiny – similar to that experienced by the health care, transportation, and banking sectors.

The actions taken by Europe are in stark contrast to the absence of effort in the United States. In recent years, Republicans and Democrats held a number of high-profile congressional hearings to scrutinise Meta, Twitter, and other companies, and federal regulators filed antitrust cases against Google and Meta, but no new federal legislation has been passed to address what many believe is the unchecked power of the technology companies.

The Digital Markets Act experienced a number of roadblocks along the way. As industrial organisations attempted to weaken the new rule, policymakers were confronted with what watchdogs described as one of the most intense lobbying campaigns ever seen in Brussels. The administration of Vice President Joe Biden likewise dismissed claims that the restrictions unjustly targeted American businesses.

There are still unanswered questions regarding how the new legislation will be implemented in reality. Corporations would be required to search for methods to mitigate its effect via the use of the legal system. In addition, regulators will want more cash to cover the costs of their enlarged supervision obligations at a time when budgets are already stretched by the epidemic.

The legislation will have a significant impact on messaging applications. WhatsApp, which is owned by Meta, may be compelled to provide a method for users of other services like as Signal or Telegram to send and receive messages from someone who uses WhatsApp, according to some reports. It would be up to those competing providers whether or not to make their products compatible with WhatsApp.

However, attempts to amend antitrust rules in the United States have progressed slowly. Congressional committees have backed legislation that would prohibit digital platforms from promoting their own goods or from acquiring smaller enterprises for their own profit. It is uncertain if the legislation will get enough support to pass through the entire House and Senate in their current forms.

Regulatory authorities in Europe are now tasked with implementing the new legislation. G.D.P.R. has been criticised for not enforcing its regulations.

Also required will be a large number of additional staff to conduct investigations into the tech corporations by the European Commission, which is the executive part of the European Union. Companies are anticipated to file lawsuits against future fines levied as a consequence of the new rule, which will likely last for years in court.

Jonathan James
I serve as a Senior Executive Journalist of The National Era
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