Europe unveils new rules to break up ‘Big Tech’

European Commission unveils a set of draft policies for ‘Big Tech’ that would force companies to change their business practices

LONDON: Europe on Tuesday unveiled legislation for ‘Big Tech’ that would give regulators sweeping new powers to take on US tech giants, threatening huge fines and raising the prospect of breakups or bans for repeat offenders.

According to CNN, the European Commission unveiled a set of draft policies that would force companies to change their business practices. It amounts to the most aggressive legislative effort to rein in companies such as Amazon (AMZN), Apple (AAPL), Google (GOOGL) and Facebook (FB) to date.

According to industry experts, very large social media companies face new obligations to remove illegal and harmful content from their platforms under the draft EU legislation called the Digital Services Act. A second proposal called the Digital Markets Act would subject firms that are branded “gatekeepers” to a list of dos and don’ts in order to prevent unfair competition. For example, such companies would be forbidden from using data obtained from business users to compete with them.

“The two proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online. And that businesses operating in Europe can freely and fairly compete online just as they do offline,” Margrethe Vestager, the EU commissioner leading the charge on tech issues, said in a statement.

The United Kingdom, which left the European Union earlier this year, is also getting in on the act. Tech companies that fail to remove or limit the spread of illegal content will face fines of up to 10% of their annual sales under rules proposed by the government on Tuesday.

“Europe is again out front in the world and taking fairly dramatic action on the tech regulation front far beyond what any other country or region … is contemplating or pursuing,” said Thomas Vinje, a partner at the law firm Clifford Chance based in Brussels.

Companies that don’t follow the proposed EU content rules could be fined up to 6% of global revenues, and repeat offenders could see their platforms temporarily banned. Firms that violate competition regulations would face fines of up to 10% of global revenues, and could be forced to sell parts of their business if they continue to break the rules.

The proposed legislation — which could take years to enact, and may still face major revisions — adds to growing pressure on Big Tech around the world.

In the United States, the federal government and states have launched landmark antitrust lawsuits against Google (GOOGL) and Facebook (FB), directly challenging the dominance of Silicon Valley’s top names. The Federal Trade Commission wants to force Facebook to sell Instagram and WhatsApp, breaking up the company.

The UK government warned it was prepared to ban platforms that fail to take the new rules seriously and impose criminal sanctions on senior managers.

“I’m unashamedly pro tech but that can’t mean a tech free-for-all,” UK Digital Secretary Oliver Dowden said in a statement. “We are entering a new age of accountability for tech to protect children and vulnerable users, to restore trust in this industry, and to enshrine in law safeguards for free speech.”

Europe’s draft rules are an acknowledgment that bloc’s past efforts to preserve competition through lengthy investigations have not been effective in tackling behavior from the likes of Google and Apple (AAPL), and that more aggressive action is needed.

“The European antitrust cases take too long, and by the time they’re resolved, the anti-competitive conduct has achieved its goal,” Vinje said. “There has been a sense now for some time that something more needs to be done.”

About The Author