Big Tech faces new curbs as European Parliament passes landmark rules

Big Tech companies are set to face unprecedented restrictions after EU lawmakers on Wednesday backed a package of rules geared at reining in the power of technology giants.

The Digital Markets Act (DMA) will impose strict limits on the behavior of so-called “gatekeeper” platforms, including rules on how they can expand and the obligation to offer customers access to rival services.

The measures, which could still change, target a short list of very large and largely American tech companies including Google, Amazon, Facebook, Apple and Microsoft — a selection that has already angered U.S. officials who accuse Brussels of unfairly taking aim at Silicon Valley firms.

EU lawmakers backed the new rules by a wide majority during a vote in the European Parliament’s Strasbourg site, applauding rules they said could affect the way millions of people use everyday digital products and services.

“In the future, the European Commission will no longer be running after Big Tech companies,” German lawmaker Andreas Schwab, who’s led writing on the bill, said before the vote. “The Commission will be able to give the green light in advance when Big Tech companies want to set up new business models.” 

In practice, the changes are set to limit so-called “killer acquisitions” — when Big Tech firms buy out smaller companies and kill off their innovations — by restricting acquisitions when companies are found to have systematically violated the DMA.

They will also include a new obligation for Big Tech firms to allow users to both uninstall pre-installed apps and provide the option of switching to rival apps.

This could mean that rather than buying an Android device with the Google Chrome browser already installed, users would be given the choice of what browser they would like to use on their product.

Unsurprisingly, this amendment was heavily backed by a contingent of Google rivals, including DuckDuckGo, Ecosia, Lilo, Qwant and Seznam.

Some trade groups, however, weren’t so keen on this addition to Parliament’s text. The App Association — which counts giants such as Apple and Microsoft as sponsors — said that these choice screens “risk locking small app developers out of the market and seriously hamper innovation.”

Other amendments that also appear in Parliament’s text include a ban on ‘dark patterns’ — online tactics used furtively to trick users into making a purchase or signing up to a service, as well as new rules on interoperability between social media services and instant messengers, which could allow someone to send a Facebook message to another user using a Google chat service, for example.   

Wednesday’s backing of Parliament’s text marks a milestone in the bill’s passage through the EU institutions, with negotiations between the Parliament and the EU Council set to commence in the new year, where points of diversion may emerge.   

Schwab, though, remains confident that Parliament and Council should find consensus on the rules at the earliest opportunity. France takes over the rotating presidency of the European Union in January.

“We don’t foresee any points of conflict in our discussions next year with the French [EU] presidency,” he said. “None at all.” 

Cédric O, France’s secretary of state for digital, praised the EU Parliament’s efforts saying that negotiations between the Parliament and the EU Council would be launched “at the very beginning of the French [EU] Presidency.”

“There is now an urgent need to act to modernize the rules governing the operation of digital markets in order to prevent unfair practices,” he added.

However, the speed at which the text is now able to progress largely depends on what the EU Council makes of the Parliament’s additions, as well as more fundamental changes that MEPs have pitched – including the number of firms that would be covered.

Parliament’s scope would catch fewer digital companies than the EU Council’s text, with thresholds including an annual European turnover of at least €8 billion, and a market capitalization of €80 billion.

Under these numbers, the rules are likely to cover the traditional Big Tech firms – Google, Amazon, Facebook, Apple and Microsoft, along with several other large companies, including German software outfit SAP.

However, this narrower threshold was criticized by some in the European Parliament, with the Socialists claiming that as many firms as possible should be targeted by the rules.

“We’ve always had a fixation on four or five huge companies,” MEP Paul Tang told POLITICO. “But there are many very big companies that we tend to forget are just as abusive, too.”

Should EU negotiators be able to find common ground quickly on points of divergence, there is then the challenge of making sure the rules are implemented as envisaged.

Under current estimates, the European Commission will bring in around 80 new members of staff to assist in the process of designating gatekeepers, monitoring compliance with the rules, and conducting investigations into potential abuses.

One cause of concern for the MEP who led the economics committee’s report, however, is that this is simply not enough.

“We must have assurances that the EU Commission is properly resourced to tackle the heavy workload that will emerge almost immediately after the rules have been adopted,” Liberal MEP Stéphanie Yon-Courtin told POLITICO.

“If we want to do this properly, we need to see the right experts in the right positions.”

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