EU approves ‘global first’ digital legislation

The European Parliament has given its stamp of approval to two landmark rules that aim to rein in the power of tech giants such as Alphabet unit Google, Amazon, Apple, Facebook and Microsoft. 

With the passing of the Digital Markets Act (DMA) and Digital Services Act (DSA), the EU is creating what it describes as  a "rulebook" for online platforms, with the goal of creating "a safer and more open digital space, grounded in respect for fundamental rights".

While the DSA focuses on targeting content deemed illegal in Europe, making platforms responsible for its removal, the DMA aims to curb anticompetitive behaviour and keep "gatekeepers" from suppressing market competition. The fines for non-compliance can reach up to 6 per cent of annual global turnover for DSA breaches, and as much as 10 per cent for DMA breaches. 

“The European Parliament has adopted a global first: strong, ambitious regulation of online platforms,” said EU antitrust chief Margrethe Vestager. 

 “The Digital Services Act enables the protection of users’ rights online. The Digital Markets Act creates fair, open online markets. Because with size comes responsibility – as a big platform, there are things you must do and things you cannot do.”

To address what it deems as unfair business practices, the DMA is set to require Big Tech companies such as Apple, Google, Amazon, Facebook and Microsoft to make their messaging services interoperable with third parties and provide business users access to the data they generate to promote their own offers and conclude contracts with customers outside of the host platform, the EU said.

In contrast, the DSA bans targeted advertising aimed at children or based on sensitive data such as religion, gender, race and political opinions, as well as banning "dark patterns", tactics that mislead people into giving personal data to companies online. 

However, despite the EU's commitment to regulate Big Tech, enforcing the new legislation might also become problematic due to regulators' limited resources.

"We raised the alarm last week with other civil society groups that if the Commission does not hire the experts it needs to monitor Big Tech's practices in the market, the legislation could be hamstrung by ineffective enforcement," said Ursula Pachl, Deputy Director General of the European Consumer Organisation. 

Last year, it was revealed that 612 companies, groups and associations spend more than €97m (£83m) annually lobbying against EU digital economy policies, specifically the DMA and the DSA, with lobbyists involved in three-quarters of the 270 meetings Commission officials had on the two draft laws.

The new rules will be enforced by the Commission for "the largest online platforms active in the EU" after they are formally adopted by the Council of the European Union and published in the Official Journal. Both acts will then enter into force this autumn.