April 28, 2022

Europe takes on the tech giants

This post was written by: Ilinca Mardarescu

Last week, the European Union passed two new laws to regulate big tech companies: the Digital Markets Act and the Digital Services Act. This new legislation represent arguably the biggest set of changes to the online world since the GDPR laws.


Fortunately, unlike the GDPR changes, these do not require substantial efforts from all businesses in the way they operate.  Crucially, the Acts are only directly relevant to companies whose main services are provided online.  Additionally, small tech companies will be spared the costliest of obligations, with only the largest companies (with a user base of at least 45 million across Europe) having to deal with the toughest regulations. These companies are identified in the Digital Markets Act as ‘Gatekeepers’, which often have interlocking services that work together to prevent users from branching out to other potential service providers, and which are capable of easily crushing smaller competitors in the marketplace. Think the likes of Amazon, Apple, Google and Meta.


At this point you might be thinking, “Ok that’s great, but why does it affect me? We’re no longer in the EU”. That is correct, and big tech companies are not going to start applying the rules to themselves voluntarily outside the EU.  However, it is likely that similar laws will be passed in a number of countries around the world following the example of Europe. This is what happened in many cases following GDPR. At this stage, it is impossible to know exactly what form a UK version of the new legislation may take, or when it will go through parliament, but it is likely to be similar to the EU version.


So, what do we have to look forward to?


For starters, the measures promise a safer and more pleasant experience for users; making it easier to report misinformation or dishonest products being sold online. They also make it easier to use services from other providers which may provide users with better value or a better experience. This includes being able to uninstall pre-installed software or apps on devices should they wish to.


For businesses, the main benefits are going to be felt by small enterprises and start-ups, as they are exempt from costs and are protected from unfair anti-competitive practices. They also benefit from the legal certainty of how Gatekeeper companies will interact with them and the terms on which they can make use of their services. This means that a business that allows users to do something as simple as creating a login using Google or Facebook could stand to benefit from the Acts.  Another benefit is the proposed system which will allow businesses to flag illegal content and goods that affect their rights, including their intellectual property.


Clearly, there will be a cost to all this. But it is one that is effectively borne by some of the largest and wealthiest companies in the world. In exchange, we get a system that will theoretically promote innovation, user choice, and fairer business practices. As for whether the Digital Market Act and Digital Services Act live up to these ambitions or not remains to be seen.  Undoubtedly however, the Gatekeeper companies most affected by these regulations will not simply accept these changes quietly.  We can anticipate years of litigation between them and the EU which will test to see how far the regulations can be pushed, the results of which will undoubtedly shape future legislation in this sector all over the world.