The EU Aims to Prevent Tech Titans from Exploiting their Market Position

Applied Tech Review | Wednesday, September 21, 2022

The European Parliament and EU member states reached a historic deal on the Digital Markets Act.

FREMONT, CA: New antitrust laws that the European Union adopted might fundamentally alter the economic strategies of American technological behemoths Meta, Apple, Amazon, and Google. The regulations are anticipated to take effect as early as possible. The Digital Markets Act, a comprehensive package of regulations intended to reduce the market dominance of companies with a tight hold on the internet economy, was the subject of a historic agreement between the European Parliament and EU members.

The regulations will apply to so-called gatekeepers, which are tech firms with market capitalisations of at least 75 billion euros USD 83 billion or three consecutive years of annual revenues in the EU of at least 7.5 billion euros. Additionally, they must have 10,000 business users in the EU or at least 45 million monthly users overall. The bill has not been approved. The 27 EU member states and the European Parliament have not formally adopted a definitive version.

The head of the EU's competition policy predicted that the regulations would go into effect very soon. They compared the DMA and earlier antitrust reforms in the banking, energy, and telecom industries. One of the reforms' main goals is to prevent IT giants, from misusing their market position to damage smaller competitors. Large internet providers have come under fire for running walled gardens and closed systems, making it more difficult for consumers to switch providers.

Companies who meet the criteria to be gatekeepers will be obliged to refrain from making their most essential software, like Google's Chrome web browser, the default setting when a user configures their device. They won't be allowed to favour their services above those of others. Additionally, gatekeepers are required to guarantee interoperability, or the capacity of various apps to cooperate, amongst instant messaging systems. That might compel Meta's Facebook Messenger or WhatsApp to exchange data with Apple's iMessage, for instance.

The chief operating officer of encrypted messaging app Element stated that Big Tech is being pushed to embrace interoperability, which will unleash a new era of creativity. There will be more options, better functionality, and improved privacy for both consumers and enterprises. Apple expressed concern that several DMA provisions can prohibit charging for intellectual property and leave consumers with unnecessary privacy and security vulnerabilities. They continue to cooperate with stakeholders across Europe to minimise these vulnerabilities.

There could be severe problems with breaching the regulations. Infractions of the DMA by gatekeepers might result in fines of up to 10 per cent of their worldwide revenues. This rises to 20 per cent for those who commit crimes repeatedly—a firm like Meta that might be as much as USD 23 billion. A market inquiry and behavioural or structural remedies, including a potential breakup of the companies, could be applied to gatekeepers who violate the regulations at least three times in eight years.

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