The European Union reached an agreement on landmark digital rules to rein in online “gatekeepers” such as Google and Facebook’s parent company, Meta.
EU officials agreed late on Thursday on wording for the bloc’s Digital Markets Act, part of a long-awaited overhaul of digital regulations with major implications for the global tech market. The act, which still needs other approvals, seeks to prevent the biggest of tech firms from dominating digital markets through the threat of fines or even the possibility of a company breakup.
The regulation would target what the act deems to be “gatekeepers” – companies with a market capitalization of at least 75bn ($ 82bn); at least 45 million monthly users; and a “platform” like an app or social network. That includes well-known firms like Google, Microsoft, Meta, Amazon, and Apple and smaller sites like Booking.com.
It targets concerns that apps have become walled off from one another, requiring that messaging services or social media platforms to “open up and interact with smaller messaging platforms”. Tech companies would also face tighter restrictions on using people’s data for targeted online ads, a primary source of revenue for the likes of Google and Facebook.
The new rules underscore how Europe has become a global pacesetter in efforts to curb the power of tech companies through an onslaught of antitrust investigations, stringent regulations on data privacy and proposed rules for areas like artificial intelligence.
“What we have been deciding about yesterday will start a new era in tech regulation,” European Union lawmaker Andreas Schwab said at a press conference on Friday.
The European Consumer Organization, or BEUC, welcomed the agreement, saying it would help consumers by creating fairer and more competitive digital markets.
Tech companies were less enthusiastic.
Apple said it was concerned that parts of the Digital Markets Act “will create unnecessary privacy and security vulnerabilities for our users while others will prohibit us from charging for intellectual property in which we invest a great deal”.
Google said it would study the text and work with regulators to implement it. “While we support many of the DMA’s ambitions around consumer choice and interoperability, we remain concerned that some of the rules could reduce innovation and the choice available to Europeans,” the company said.
Amazon said it was reviewing what the rules mean for its customers. Facebook did not reply to a request for comment.
The act includes a number of eye-catching measures that could shake up the way big tech companies operate.
Companies would not be allowed to rank their own products or services higher than those of others in online search results or reuse data collected from different services.
A user’s personal data cannot be combined for targeted ads unless “explicit consent” is given.
Messaging services and social media platforms must work with each other to avoid the domination of a few companies that have already established big networks of users. That opens up the possibility, for example, of Telegram or Signal users being able to exchange messages with WhatsApp users.
Violations could be punished with large fines: up to 10% of a company’s annual income. For a repeat offense, a fine of up to 20% of its worldwide turnover may be imposed. That could work out to billions of dollars for wealthy Silicon Valley companies.
Negotiators from the European Parliament and the Council, which represents the 27 EU member states, reached the deal after months of talks. It now needs to be endorsed by the Council and the European Parliament.