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  • Thierry Spanjaard

Europe vs. GAFAM – a new era?

The topics of regulating digital platforms such as the GAFAM – Google Apple Facebook Amazon Microsoft - have been running for long. In a world where the capacity to weigh on other parties' decisions is measured according to financial power, the weight of these platforms becomes an issue for government regulators. For instance, Meta Platforms, which operates as Facebook, market capitalization was over US$ 1 trillion (EUR 939 billion) for the last part of 2021, comparable to the GDP of Mexico or Indonesia. Also Twitter has just been acquired by Elon Musk for US$ 44 billion (EUR 41.3 billion), an amount comparable to the GDP of Slovenia or Uzbekistan.

The EU has already been working for a few years on two major acts: the DMA (Digital Market Act) and the DSA (Digital Services Act), which aim at reaffirming preeminence of governments, or more precisely in this case the European Union meta-government, over private entities.

The DSA - Digital Services Act - aims at creating a safer digital space in which the fundamental rights of all users of digital services are protected. The DSA stops platforms from targeting users for online ads with algorithms using data based on their gender, race or religion. Targeting children with ads is also prohibited. Tech companies are required to implement new procedures designed to take down illegal material such as hate speech, incitement to terrorism and child sexual abuse. E-commerce marketplaces like Amazon must also prevent sales of illegal goods under the new rules. The law includes measures compelling tech giants to be more transparent about the algorithms they use to recommend content to users. “What is illegal offline should also be seen and dealt with online,” said Margrethe Vestager, European Commissioner in charge of Competition. “With the DSA, the time of big online platforms behaving like they are 'too big to care' is coming to an end," added Thierry Breton, European Commissioner for the Internal Market. Under DSA, the platforms will not be subject to a general monitoring obligation regarding user content. However, they will have to act promptly after being alerted of illegal content.

Failure to comply with the rules may result in fines of up to 6% of companies’ global annual revenues. The law, which has met an agreement between EU Parliament, Council and Commission in April 2022, is now subject to formal approval by EU institutions. It’s expected to come into force as early as 2024.

The DMA – Digital Market Act - which was approved late March 2022 thanks to a trilogue - three-way talks between European Parliament, Council and Commission – targets so called “gatekeepers,” companies providing core platform services with a market capitalization of at least EUR 75 billion or an annual turnover of EUR 7.5 billion and at least 45 million monthly end users in the EU. Its global goal is to enhance competition by making it easier for new platforms to enter the market. Under DMA, the gatekeepers are prohibited from giving preference to their own services over others. Typically, examples such as Apple restricting users to its own app store or certain data collection practices of Google fall under the DMA. For instance, access to search engine data is to be granted on fair, reasonable, and non-discriminatory terms. Also, under DMA, the gatekeepers have to allow app developers fair access to the supplementary functionalities of smartphones such as NFC chips and Secure Elements.

The DMA also comes with its set of sanctions: a gatekeeper may risk a fine of up to 10% of its total worldwide turnover; for a repeat offence, a fine of up to 20% of its worldwide turnover may be imposed.

Some analysts see the DMA as a complement of GDPR, the General Data Protection Regulation passed in 2016, as it aims at preventing personal data from being shared inappropriately and by establishing access to data relevant for competition: gatekeepers may not combine personal data from different sources. The DMA also requires gatekeepers to offer real-time data portability to both business and personal users, real-time data access to business users, and de-personalized search engine data to any competitor.

While the goal of regulating the net giants meets a strong consensus, the detailed provisions of the regulations are always a subject of controversy. Unsurprisingly, the Big Tech corporations have been actively lobbying against these regulations. According to TechCrunch, the Big Five - Google Apple Facebook Amazon Microsoft - collectively spent over EUR 27 million in lobbying against DMA and DSA in 2021, a steep increase over their previous lobbying expenses. Of course, bringing an even field for all players in the technology arena is welcome. A good balance is to be found between regulating illegal content and ensuring free speech will not be restricted.

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