The European Parliament has agreed its negotiating position on draft legislation to put limits on how Big Tech can operate with the aim of rebooting competition and fair dealing in digital markets.
The proposal also takes aim at so-called ‘killer acquisitions’ where powerful platforms buy up smaller rivals or startups to choke off alternative services before they have a chance to scale, limiting competition and consumer choice.
MEPs overwhelmingly backed the legislative plan in a plenary vote yesterday — while also adding their own tweaks, including pushing provisions intended to tackle damaging default settings.
The European Council, the body made up of Member States’ representatives, decided its negotiating position last month — meaning action now moves to trilogue discussions between the EU’s co-legislators in January, overseen by the French who hold the rotating Council presidency.
France has said that passing the legislation package is one of its digital priorities for the Council presidency.
Big backing for tackling big tech
The Digital Markets Act (DMA) was presented as a draft proposal by the Commission a year ago, alongside the Digital Services Act (DSA) — a broader update of the bloc’s ecommerce rules which also contains some requirements solely aimed at larger platforms, along with provisions that apply across the board to the in-scope digital services.
So while the DSA is expected to require time for all side to reach a compromise (and won’t now face a plenary vote until January), the DMA has been moving at a fair clip through the EU’s co-legislative process — as regional lawmakers find plenty of common ground over the need to rein in Big Tech.
With the DMA, the bloc’s lawmakers are responding to concerns that the biggest tech companies hold an overly commanding ‘gatekeeper’ role over digital markets and Internet users which has led to abusive business practices that harm competition and exploit consumers.
The Commission drew on its experience of antitrust enforcement against tech giants like Google in shaping the draft proposal — which has faced a string of penalties in the EU in recent years.
EU lawmakers’ hope is that a list of upfront ‘dos and don’ts’ for tech giants — combined with centralized enforcement by the Commission itself — will be able to reset digital markets and ensure they are fair and open.
It’s notable that the text approved by a plenary vote of the Parliament yesterday received 642 votes in favour, 8 against and 46 abstentions — suggesting there is broad backing across the political spectrum for clipping the wings of Big Tech.
For a little comparative context, back in 2017, a plenary vote in the Parliament on a different piece of digital legislation — the ePrivacy Regulation — draw far less support, with of the (then) 618 MEPs only 318 voting for the draft proposal vs 280 voting against. And, perhaps unsurprisingly, the ePrivacy update remains stalled even now.
Progress on updating ePrivacy has been blocked by ferocious lobbying from a number of sectors — and also by tech giants such as Google who, in a July 31, 2019 memo which recently came to light via antitrust litigation in the US, can be seen congratulating itself on its “success” at “slowing down and delaying” the regulation, including by “working behind the scenes hand in hand with the other [tech giants]”.
So it’s perhaps rather fitting that the giants that make up ‘GAFAM’ (Google, Apple, Facebook, Amazon, Microsoft) are now facing bespoke legislation aimed at reducing their market power and — ultimately — shrinking how much resource they have to lobby against laws they’d prefer not to exist.
Certainly it looks like a smart move by the Commission to put the DMA and DSA into separate legislative packages.
That has made it harder for tech giants to resort to their typical astroturfing techniques — whereby they draw on an extensive, opaque network of industry associations and thinktanks they help fund, cloaking direct lobbying against tighter regulation of their own business models by projecting their talking points through a litany of worthy sounding third parties.
MEPs target damaging defaults
MEPs have tweaked the Commission proposal in a number of ways — expanding the scope of the DMA so it will also apply to web browsers, virtual assistants and connected TVs, in addition to the original blend of online intermediation services, social networks, search engines, operating systems, online advertising services, cloud computing, and video-sharing services — or rather the subset of those companies that meet the relevant criteria to be designated “gatekeepers”.
Parliamentarians also beefed up the criteria for being designated a gatekeeper — increasing the quantitative thresholds to €8BN in annual turnover in the European Economic Area (EEA) and a market cap of €80BN. Which may be intended to avoid fewer European tech giants from falling into scope (e.g. Spotify).
To be considered gatekeepers under the DMA a company must also provide a core platform service in at least three EU countries and have at least 45M monthly end users, and/or 10,000+ business users.
The parliament gave it fulsome support to the roster of changes voted on by the IMCO committee last month — which also includes restrictions on killer acquisitions in the case of systematic non-compliance; additional requirements on the use of data for targeted or micro-targeted advertising (but not a full prohibition on tracking-based ads, as some MEPs have been pushing for); and some interesting looking interoperability provisions.
MEPs want users to have the option to be able to uninstall pre-installed software applications that big tech bundles with a core platform service — and crucially want that to be possible “at any stage”.
A number of Google search engine rivals had been pressing MEPs to beef up the DMA to tackle damaging default settings.
And in a tweet yesterday DuckDuckGo founder, Gabe Weinberg, said the parliament had taken “a big step” by introducing what he billed as “a choice screen mandate” to the DMA’s mix.
In recent years, the non-tracking Google search engine rival has been pressing for regulatory intervention to ensure true “one-click” competition, arguing that regulation must ensure tech giants don’t simply stack the deck by making it ridiculously convoluted for users to switch away from their own services.
“We’re now looking forward to the final stage of talks. If done right, the DMA will let people more easily choose their search engine default,” Weinberg added.
Commenting in a statement on the plenary vote, DMA rapporteur and MEP Andreas Schwab, said: “Today’s adoption of the DMA negotiating mandate sends a strong signal: The European Parliament stands against unfair business practices used by digital giants. We will make sure that digital markets are open and competitive. This is good for consumers, good for businesses and good for digital innovation. Our message is clear: The EU will enforce the rules of the social market economy also in the digital sphere, and this means that lawmakers dictate the rules of competition, not digital giants.”