The rise of technology superpowers like Microsoft, Amazon, Apple, Meta, and Google has created new challenges for the competition watchdogs, which enforce antitrust laws around the world.
More so in the European Union, the most aggressive jurisdiction so far, vis-à-vis the Big Tech.
Now, Alphabet unit Google, Meta and other large online platforms will have to do more to tackle illegal content or risk hefty fines under new rules agreed between EU countries and lawmakers.
The EU’s Digital Services Act (DSA) approved on April 23 gives governments more power to force the companies to take down illegal content such as hate speech, terrorist propaganda or ads for unsafe toys.
If they don’t, they could face fines running to 6% of their annual revenue.
Platforms will have to adhere to a code of conduct, allow enforcement agencies to examine the algorithms that decide what users see and report back on how they’re dealing with harmful material.
If it’s found they’re not doing enough, they could be told to alter the algorithms. Additional powers to combat disinformation could be triggered during a crisis such as a war or a pandemic.
Ads aimed at children — an important source of revenue for the companies that own Facebook and Google — will be banned. So will the targeting of ads using race, religion and other sensitive information.
The DSA envisages that the social media giants will no longer be left to police themselves, though much depends on what the EU decides is harmful and how rigorously the new rules are enforced.
According to Facebook whistle-blower Frances Haugen, the DSA could represent a “global gold standard” for regulating social media.
For sure, the Big Tech is concerned that the details of how the DSA will work in practice aren’t clear. Watchdog groups say the tech giants spent record sums lobbying the EU, especially on the DSA and the Digital Markets Act, a separate piece of legislation designed to rein in their market power.
For sure, tech giants have leverage over both producers and consumers. They are also growing by snapping up potential rivals that might threaten market share.
Data compiled by Bloomberg shows the Big Five — Alphabet, Amazon, Apple, Meta, and Microsoft — made more than 600 acquisitions in the last decade worth more than $200bn.
None may be more controversial than Facebook’s acquisition of Instagram in 2012. Critics say the takeover eliminated an emerging competitor that on its own would have come to rival Facebook in social media.
The companies also have control over vast amounts of data about their customers, raising concerns about threats to privacy.
Silicon Valley executives are waking up to the backlash, striking a more conciliatory note.
It’s going to be tough task for the EU, though.
The EU will need to find the funds to employ hundreds of people to monitor the DSA and the DMA. And even heavy fines might simply be shrugged off by the cash-rich tech giants.
More significantly, the way the DSA is implemented will be up to the EU’s 27 member states, which all have different legal regimes.
The DSA is seen as putting Europe ahead of the US in regulating big tech companies. The US has even fought the EU’s plans, arguing they unfairly target American companies.
