Late Thursday, EU officials reached an agreement on the text of the bloc's Digital Markets Act. This is part of a long-awaited overhaul to its digital rules. This act is still in process of approval and aims to stop tech giants dominating digital markets. It also includes the threat of huge fines or even company dissolution.
They are restricted in their ability to use people's data to target online ads. This is a major source of revenue for Google, Facebook and other social media platforms. However, different messaging services and social media platforms will need to cooperate.
These new rules highlight how Europe has been a global leader in efforts curbing the power tech companies through an avalanche of antitrust investigations and stringent regulations regarding data privacy, as well as proposed rules in areas such artificial intelligence.
Andreas Schwab (EU's leading lawmaker) said that "What we decided about yesterday will begin a new age in tech regulation." He spoke at a press conference on Friday.
However, on the same day, the European Union and the U.S. reached a preliminary agreement that allows Europeans to have their personal data stored in the U.S..
The EU has a set of rules called the Digital Services Act that aims to protect online users from harmful or illegal content. It also targets tech giants and imposes stricter regulations to remove or flag abusive or illegal content. Margrethe Vestager, EU competition chief, said that both are due to go into effect in October.
The European Consumer Organisation (BEUC) welcomed the Digital Markets Act agreement. It stated that it would benefit consumers by creating more fair and competitive digital markets. EDRi, a digital rights group, stated that it will "narrow down the power imbalance between individuals and online platforms."
Tech companies were less enthusiastic.
Apple stated that it was concerned about the Digital Markets Act's parts. Others, however, will prevent Apple from charging intellectual property fees for which it has invested a lot.
Google stated that it would review the text and collaborate with regulators to make it implementable.
The company stated that it supports many of the DMA’s goals around consumer choice, interoperability and choice, but was concerned about some of the rules.
Amazon stated that it is currently reviewing the rules to determine what they mean for customers. Meta, which also controls Instagram and WhatsApp didn't respond to a request for comment.
The Digital Markets Act contains a variety of innovative, eye-catching measures that could change the way large tech companies work.
They would not be permitted to rank their products or services higher in search results than others. Amazon wouldn't allow its brand of goods to be listed ahead of those from independent merchants.
Apps or software that are essential, such as web browsers, can't be installed automatically alongside the operating system. This is similar to the way Google Chrome comes with Android phones. Apple's grip on iPhone apps is being relaxed by an App Store initiative.
Without explicit consent, personal data of users cannot be combined to create targeted ads. This would prohibit Google from gathering information about YouTube viewing, online search, travel history, and Gmail conversations in order to create a profile that can serve personalized ads. Users must agree to each one.
To avoid dominance by a few companies with large user networks, messaging services and social media platforms need to work together. This opens up the possibility that Telegram or Signal users can exchange messages with WhatsApp users,
Online services should allow users to opt out as easily as signing up.
Jan Penfrat (senior policy advisor at EDRi) said that this is "aimed at services where signing up is super easy -- boom, you're customer -- but unsubscribe can be hidden under three levels menus," such Amazon Prime. They push it on you with large, colorful buttons. But it's really hard to get out.
The criteria for defining a gatekeeper have been modified to include companies that have at least 7.5 Billion Euros ($8.3 Billion) in annual European revenue, have a market worth of 75 Billion euros, offer services in at least three EU nations, and have 45 M users and 10,000 business users annually in the bloc.
Violations can result in severe penalties, up to 10% of an organization's annual income. For wealthy Silicon Valley companies, repeat offenders could face fines up to 20% of their worldwide revenue. This could amount to billions.
After months of negotiations, the agreement was reached by the European Parliament and European Council. The Council and European Parliament must now endorse it.