European Union passes landmark laws to rein in big tech

The Digital Markets and Services Acts are designed to level the playing field.

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Today, after months of negotiations and procedural hurdles, the European Union has passed a pair of landmark bills designed to rein in Big Tech’s power. The Digital Markets Act and Digital Services Act are intended to promote fairer competition, improve privacy protection, as well as banning both the use of some of the more egregious forms of targeted advertising and misleading practices.

The Digital Services Act, for instance, focuses on online platforms like Facebook, Amazon and Google. They will be tasked with being more proactive both with content moderation and also to prevent the sale of illegal or unsafe goods being sold on their platforms. Users will also be able to learn how and why an algorithm recommended them a certain piece of content, and to challenge any moderation decision that was made algorithmically. Finally, companies will no longer be able to use sensitive personal data for ad-targeting, sell ads to children, or use dark patterns — deceptive page design that can manipulate you into saying yes to something even when you'd much rather say no, such as joining a service or preventing you from leaving one you no longer wish to use.

These obligations operate on a sliding scale, and so the largest platforms will have the greatest obligations placed upon them. Platforms with 45 million or more monthly users will be subject to independent auditing to ensure they are preventing fake news and illegal content. Those platforms will also have to open up their algorithms and data to (approved) researchers to enable them to study the effects, and potential harm, the systems can cause.

The Digital Markets Act, meanwhile, is more focused on preventing dominant platform holders, like Google, Microsoft and Apple, from abusing their scale. This includes offering better interoperability with smaller, rival services, ensuring files can be sent between systems. There is also a large carve-out for app storefronts, with developers now entitled to contact their customers about deals without going via the platform holder in question. And platform holders will no longer be able to give their systems favorable treatment, such as when Google promoted its own shopping service over that of rivals.

The EU has given both bills plenty of teeth, and can dole out a maximum penalty of 10 percent of its total worldwide turnover from the previous year, should regulators find non-compliance. This figure will, however, jump to 20 percent of worldwide turnover if officials find “repeated non-compliance.” That’s a hefty figure big enough that not even Apple would be able to stomach losing on a regular basis. Although, as with GDPR regulation, the EU still has questions to answer about how much effort, time and money it’s prepared to put behind a body to monitor big tech.

Now that they have been passed, the Digital Services Act will come into force by 1st January 2024 (unless some procedural stuff delays it) while the Digital Markets Act will come into force at some point soon after, and major platforms — dubbed “Gatekeepers” will have a further six months to get their houses in order before the new rules apply to them.