EU targets Big Tech with sweeping new antitrust rules

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European Commission Executive Vice-President for a Europe Fit for the Digital Age Margrethe Vestager.

Thierry Monasse | Getty Images News | Getty Images

The European Union has agreed to landmark new antitrust regulations that could radically reshape the business models of US tech giants Meta, Apple, Amazon and Google. The rules are expected to come into force as early as October.

The European Parliament and EU member states reached a historic agreement on Thursday on the Digital Markets Act, a sweeping set of rules aimed at limiting the market power of companies with a tight grip on the internet economy.

The rules will apply to so-called ‘gatekeepers’, tech companies with a market capitalization of at least 75 billion euros ($83 billion) or annual revenues within the EU of at least 7 .5 billion over the last three years. They must also have at least 45 million monthly users or 10,000 business users in the EU.

The legislation has not been passed. A finalized version has yet to be officially adopted by the European Parliament and the 27 countries that make up the EU.

EU competition chief Margrethe Vestager said she expects the rules to come into force “sometime in October”. She compared the DMA to historic antitrust reforms in the banking, energy and telecommunications sectors.

“What we have learned over these years is that we can correct in specific cases, we can punish illegal behavior,” Vestager said at a Friday morning press conference.

“But when things get systemic, we also need regulation because, if there’s systemic bad behavior, if there’s entrenched positions, then we need regulation.”

“For companies that act as gatekeepers, the Digital Markets Act will now set the rules of the game,” she added.

What this means for Big Tech

One of the main aims of the reforms is to prevent tech giants from abusing their market position to harm smaller rivals. Big internet companies are often criticized for operating “walled gardens”, closed systems that make it harder for a user to ditch one provider for another.

Companies that qualify as gatekeepers should avoid setting their most important software — for example, Google’s Chrome web browser — as the default option when a user sets up their device. They will also be prohibited from favoring their own services over others.

Additionally, gatekeepers must ensure “interoperability” (ie the ability of different applications to work together) between instant messaging services. This could mean that Apple’s iMessage is forced to exchange data with Facebook Messenger or Meta’s WhatsApp, for example.

Apple said it was concerned that certain elements of the DMA could introduce “unnecessary privacy and security vulnerabilities” for users and “prohibit us from charging for intellectual property.”

“We deeply believe in competition and in creating thriving competitive markets around the world, and we will continue to work with stakeholders across Europe in hopes of mitigating these vulnerabilities.”

The consequences of breaking the rules could be serious. Guardians who violate the DMA face fines of up to 10% of their worldwide earnings. For repeat offenders, this will increase to 20%. To put that into context, that would be up to $23 billion for a company like Meta.

Custodians who break the rules at least three times in eight years risk being subject to market investigation and, if necessary, “behavioural” or “structural” remedies, including possible corporate breakups.

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