By KELVIN CHAN and SAM PETREQUIN, Associated Press
BRUSSELS (AP) – The European Union has laid the groundwork for stepping up crackdowns on big tech companies with an agreement on pioneering digital rules to curb online “gatekeepers” like Google and Facebook parent Meta.
EU officials late Thursday agreed on the text of the bloc’s Digital Markets Act, which is part of a long-awaited overhaul of its digital rulebook. The law, which requires other approvals, aims to prevent tech giants from dominating digital markets, with the threat of hefty fines or even the possibility of company destruction.
For example, they face tighter restrictions on using people’s data for targeted online ads – a major source of revenue for Google and Facebook – while requiring different messaging services or social media platforms to work together.
The new rules underscore how Europe has become a global leader in efforts to curb the power of tech companies through an onslaught of antitrust investigations, tough privacy rules and proposed rules for areas like artificial intelligence.
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“What we decided yesterday will usher in a new era of technology regulation,” said the European Union’s lead legislator, Andreas Schwab, at a press conference on Friday.
On the same day, however, the European Union reached an interim agreement with the US that paves the way for the storage of Europeans’ personal data in the US
In its crackdown on tech giants, the EU also has another set of rules, the Digital Services Act, which aims to ensure online safety for users through stricter requirements to flag and remove harmful or illegal content or services, such as hate speech and counterfeit goods. Both should come into force by October, said EU Competition Commissioner Margrethe Vestager.
The European Consumers Organization (BEUC) welcomed the agreement on the Digital Markets Act, saying it would help consumers by creating fairer and more competitive digital markets. Digital rights group EDRi said it will “reduce the power imbalance between people and online platforms”.
Tech companies were less enthusiastic.
Apple said it was concerned that parts of the Digital Markets Act “create unnecessary privacy and security vulnerabilities for our users, while others prohibit us from charging for intellectual property in which we invest heavily.”
Google said it will review the text and work with regulators to implement it.
“While we support many of the DMA’s efforts related to consumer choice and interoperability, we remain concerned that some of the rules may limit innovation and the choice available to Europeans,” the company said.
Amazon said it is reviewing what the rules mean for its customers. Meta, which also owns Instagram and WhatsApp, did not respond to a request for comment.
The Digital Markets Act contains a number of eye-catching, groundbreaking measures that could revolutionize the way big tech companies operate.
They would not be allowed to rank their own products or services higher than those of others in search results. This means, for example, that Amazon is not allowed to list its own brand of goods before competing offers from independent retailers.
Important software or apps like web browsers cannot be installed with the operating system by default, just like Google’s Chrome comes bundled with Android phones. There is also a measure aimed at loosening Apple’s stranglehold on iPhone apps through its App Store.
A user’s personally identifiable information may also not be combined for targeted advertising, unless “express consent” is obtained. This would prevent Google from collecting information about YouTube ads, online searches, travel history from Maps and Gmail conversations to build a profile to serve personalized ads unless users consent to each.
Messaging services and social media platforms must work together to avoid dominance by a few companies that have already built large user networks. This opens up the possibility, for example, that Telegram or Signal users can exchange messages with WhatsApp users.
Online services would need to ensure that users can unsubscribe as easily as they can log in.
That’s “aimed at services where it’s super easy to sign up – boom, you’re a customer – but opt out is hidden under three levels of menus,” like Amazon Prime, said Jan Penfrat, senior policy advisor at EDRi. “They push it on you with big colorful buttons, but it’s really hard to get out of there.”
The rules’ criteria for defining a gatekeeper have been adjusted to include companies that have had annual sales of at least €7.5 billion (US$8.3 billion) in Europe over the past three years, a Have a market value of 75 billion euros and provide services in at least 75 billion euros in three EU countries and have 45 million users and 10,000 business users in the block every year.
Violations could be punished with hefty fines: up to 10% of a company’s annual income. Repeat offenders could be fined up to 20% of global sales, which could add up to billions of dollars for wealthy Silicon Valley companies.
Negotiators from the European Parliament and the European Council, which represents the 27 EU member countries, reached an agreement after months of talks. It now has to be approved by the Council and the European Parliament.
Chan reported from London. Follow him on Twitter at https://www.twitter.com/chanman.
View all of AP’s technical coverage at https://apnews.com/hub/technology.
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