It is a revolutionary move.
The European Commission is putting forward new rules that will shake up how Big Tech works.
These enormous companies are wary of the regulation and complain it could hinder innovation.
So why is the European Union getting so tough on Big Tech?
Over the past few years, the European Commission has opened a series of investigations
into companies such as Google, Facebook and Amazon.
This is because the European Commission is concerned about how powerful these companies have become.
The main worry is that they’re preventing other smaller firms from competing in the European market.
But these investigations have dragged on for years,
resulting in lengthy legal disputes and few practical changes.
A recent example is the case involving Ireland and Apple,
which has its European headquarters in the country.
In 2016, the commission ordered Ireland, a member of the EU,
to recoup €13 billion in unpaid taxes from Apple. But both the Irish government
and the California-based iPhone maker have contested this decision.
The EU’s general court said in July that the commission failed to prove
that there had been a tax advantage and the dispute has now proceeded
to the EU’s highest court, more than four years after the case began.
There is a great deal of frustration by many, including the European Commission itself,
the parliament, member states, and many others
about the failure of existing competition law and competition enforcement.
And so there has been a sort of a rising tide towards regulating these companies.
But there is more: European policymakers have said that
the current rules were not designed for a digital economy and need to be updated.
We are coming from past years where the regulation has been fragmented,
where the regulation has become quite old to be honest,
and where enforcement and cooperation in Europe were quite limited.
The need for the European authorities to take our destiny in control
and actually to push for what they called digital sovereignty is reflected in this regulation.
This will be a game-changer.
At the same time, there’s strong public support in Europe for tighter regulation of the digital giants.
Why do you think the European Commission is coming up with this new regulation now?
There is a lot of, you know, political backlash against the tech firms
and there is the feeling that something has to be done.
Many European countries have independently developed plans to tax tech giants more.
But there are concerns that a fragmented approach is less effective than rules applying across all 27 member states.
That’s why the European Commission has been working on new regulation to prevent tech firms from abusing their powers.
The new rules are expected to be divided into two complimentary pieces of law:
the Digital Services Act and the Digital Markets Act.
The Digital Services Act is expected to police content on key platforms.
It will allow for increased oversight of illegal and harmful content,
and set rules for the use of artificial intelligence.
The Digital Markets Act is set to make competition fairer
and reduce monopolistic behaviour. It could put an end to self-preferencing:
for example, when Apple displays its own apps at the top of the App Store.
These two acts could be viewed as revolutionary.
They will, I expect, to have a dramatic impact upon Big Tech
and require dramatic changes to their business conduct
and indeed perhaps even to their very business models.
This is why companies like Google are making the case
that the laws need to be written in a way that would soften the blow on their operations.
An example of a concern we might have: today, if you were to look for a restaurant on Google,
we can provide you with a map, a link to its opening hours, an ability to book.
Now, if the rules are written in the way that some speculate, it could be that we are no longer
allowed to combine that information in search results, which is a really helpful tool
not only for consumers but also for those small businesses.
We want to ensure that they can benefit from the best possible tools available.
Margrethe Vestager, Europe’s competition chief, explained in more detail
what’s likely to happen under the new regulation:
Those platforms would have to provide regular reports on the content moderation tools they use,
the accuracy, the results of those tools.
And they’d have to give us better information about the ads that we’re seeing,
explaining for example who placed a certain ad and why it has been targeted at us.
This would be very unpopular with the tech firms, which have refused to disclose their algorithms for years.
It would also become another milestone in EU policymaking, just like the General Data Protection Regulation or GDPR,
which was introduced in 2018 and gave users more control over their data.
This regulation that is currently being developed is orders of magnitude strategically more important
than GDPR for the hearts of the business models and the reason is this:
the legislation seems willing to prohibit a variety of practises
which have been the main way these platforms monetize their investments.
But the implications of the upcoming rules go beyond the tech giants we’re familiar with.
There are also concerns that it would reduce Europe’s competitiveness
and ability to nurture homegrown tech giants.
Of the world’s 20 biggest tech firms, only one is based in the EU.
Silicon Valley alone was the birthplace of three out of the five largest,
while across the Pacific, China’s Alibaba and Tencent have rapidly grown bigger than any of their European competitors.
So what sort of impact do you expect this legislation to have on European innovation?
There is a risk, it would be foolish to say that there’s no trade-offs.
The next European unicorn could be falling within the scope of this legislation.
Well it’s important to get the detail of the rules right to enhance innovation in Europe.
I think one of the most important routes to innovation is the route to scale.
People ask me, you know, why isn’t there a European Google, or Facebook, or Twitter, or you know, anything.
And I think having a digital single market with clear rules across all those countries
can really help people get to scale faster, with less bureaucracy.
So, is there anything that Big Tech can do to avoid the new rules?
I think the chances of those who oppose this legislation
to actually stop it, to prevent it from being adopted,
are pretty close to zero. It’s going to happen.
These companies have, of course, extraordinary resources, so they will have their armies
descend upon the EU institutions and arguing why this legislation should not be adopted.
That again I think is bound to fail but they might be able to have some influence over specific provisions.
It will take some time before these proposals become law
but the EU certainly hopes they will change how Big Tech works.
Hi everyone. Thank you so much for watching.
Do you think Big Tech needs to be regulated more?
Let us know in the comments section and I will see you soon.