EU lawmakers approve regulations on big tech companies

Dive Brief:

• The European Parliament this week voted in favor of two significant laws to regulate technology giants including Apple, Google and Meta that have been deemed to be too dominant in digital media and e-commerce. The legislation sets up potential legal disputes over applying the rules in a region of 450 million consumers.
• The Digital Markets Act (DMA) takes aim at alleged anticompetitive behavior of what it calls “gatekeeper platforms” with its rules on digital advertising, app stores and online messaging. The law likely will take effect later this year, giving tech giants until the middle of 2023 to comply.
• The Digital Services Act (DSA) makes tech platforms liable for illegal content such as hate speech, disinformation and the promotion of unsafe products, and gives citizens a way to formally complain about content moderation. It will take effect as early as January 2024, and possibly sooner for the biggest social media and internet search providers.

Dive Insight:

Depending on how the EU enforces its new laws on big tech companies, the effect on marketers will vary. The DMA requires companies to obtain explicit consent from consumers to use their personal data for targeted advertising. It also gives people more power to select different web browsers, virtual assistants and search engines, which may affect how marketers reach target groups of consumers who lessen their usage of the most dominant platforms. App developers conceivably will have more ways to collect payments from mobile users and greater latitude in their fee structures, such as the ability to offer discounts outside of app stores.

The EU’s laws have teeth with their threats of serious fines. The DMA’s noncompliance fines can be as much as 10% of a company’s yearly global revenue, or 20% for repeat offenses. The DSA has a maximum fine for an online platform or search engine of 6% of worldwide revenue. EU officials also are setting up teams to implement different parts of the new laws, and plan to add staff in the next couple of years, Thierry Breton, the EU’s internal market commissioner, said in a blog post.

“Ten years ago, a page was turned on the so-called ‘too big to fail’ banks,” Breton said in reference to the 2008 financial crisis that led to stricter rules on banks. “Today, a new page is being turned, that of the ‘too big to care’ platforms.”

The EU’s package of laws on big tech companies is significant not only because of their effect on a major economic region, but also in setting the tone for regulation in other regions. Prior legislation, such as the European General Data Protection Regulation (GDPR) that took effect four years ago, helped to shape the framework for consumer privacy rules in multiple countries and U.S. states.

The U.S. doesn’t have similar federal regulations, though Democratic and Republican lawmakers have sponsored bills that take aim at the alleged anticompetitive behavior of big technology companies. The American Innovation and Choice Online Act (AICO) would prohibit some large online platforms from giving preference to their own products and services to limit competition. The Competition and Transparency in Digital Advertising Act likely would force companies such as Google to break up their advertising businesses. The Open App Markets Act would require companies like Apple and Google to loosen their rules on how software developers can distribute apps.