Major tech companies are facing stricter rules and hefty fines for breaking them in the European Union. Officials could even break up companies that often engage in anti-competitive actions.
The European Commission has unveiled drafts of two sweeping pieces of legislation. The object of the Digital Markets Act (DMA) is to limit antitrust behavior among tech companies. The Digital Services Act (DSA) seeks to make them more accountable for illegal and harmful activity that takes place on their platforms. It would force platforms to take down such content quickly.
Companies that violate the DMA could face fines of up to 10 percent of their annual worldwide revenue and "periodic penalty payments" of up to 5 percent of average daily income. If they continue to infringe on the rules, the EU may consider “behavioral and structural remedies, e.g. the divestiture of (parts of) a business."
If the DSA becomes law and platforms don't adequately tackle illegal or harmful content, they could be hit with fines of up to six percent of their global income. For comparison, the maximum fine for General Data Protection Regulation violations is €20 million (about $31 million) or 4 percent of total annual revenue — whichever is higher.
The EC's goals with the proposed rules are "to create a safer digital space in which the fundamental rights of all users of digital services are protected" and "to establish a level playing field to foster innovation, growth, and competitiveness, both in the European Single Market and globally."
These pieces of legislation mark the first major revamp for the EU's approach to governing the internet for two decades, as the Financial Times notes. EU competition chief Margrethe Vestager expressed hope to CNBC that the rules will be adopted as soon as possible, but it could take two years.
Under the DMA, companies would have to allow users to remove pre-installed software. They wouldn’t be able to treat their own products and services "more favorably in ranking than similar services or products offered by third parties.” The EU has fined Google over similar practices in the past, while Apple last year tweaked its App Store algorithms so its own apps don’t always pop up first in search results.
The proposed rules would impact users directly. For instance, they’d be notified when platforms remove their content and have a way to contest it, and there’d be transparent rules for content moderation. The DSA would require platforms to provide "meaningful information" about ads. Services would also need to spell out why they're recommending certain content, and users would get to opt out of receiving such suggestions based on profiling.
Also on Tuesday, the UK announced its own proposals for tackling harmful content on social media to protect children and adults. The government said they'd apply to the likes of Facebook, Instagram and Twitter as well as "gaming sites, forums and messaging apps and commercial pornography sites" among other websites."
If platforms don't act quickly enough to take down illegal content, they could face fines of up to £18 million ($24 million) or 10 percent of revenue. The senior managers of those companies could be held liable and the UK could even block services that break the rules.
Major tech firms are under increasing scrutiny from regulators across the globe. Last week, the Federal Trade Commission and 48 attorneys general brought antitrust charges against Facebook. On Monday, the agency ordered nine companies (including Facebook, Twitter and Amazon) to provide details on how they drive user engagement and use personal data.