Big Tech turns on itself in face of new EU legislation

Together, the EU's planned Digital Services Act and Digital Markets Act could be the biggest threats ever posed to the dominance of digital giants. Now, the Big Tech companies are pointing fingers.

After two decades of nearly unchecked growth, Big Tech companies like Facebook, Apple, Amazon and Google may have finally met their match.

The European Commission, a powerful European Union body, on Tuesday presented a draft of legislation that seeks to put unprecedented limits on the powers of Big Tech companies operating within the bloc.

The digital technologies that have come out of these firms have changed society on a fundamental level, affecting everything from how we consume and pay for goods and services to who we interact with and how. When they emerged some 20 years ago, few could have imagined the ways they would change society.

Today, it's nearly as difficult to imagine a future where their dominance and influence has been reined in.

Original tech boom is over

Until now, oversight has been largely left in the hands of the companies themselves. Changes to questionable practices have usually come about only after a public scandal. Solutions, like promises to handle user data or disinformation differently, have often lacked transparency. And when tech giants have faced legal scrutiny, courts and lawmakers have had little success in bringing about meaningful change.

But the European Commission's proposed Digital Markets Act and Digital Services Act could fundamentally change this. The body has set its sights on the biggest players, most of them American companies that emerged out of Silicon Valley in California.

Digital companies with over 45 million users could face fines as high as 10% of their annual turnover for anti-competitive practices. They'll be required to share data with regulators, as well as their plans for mergers and acquisitions. The companies will also have greater responsibility for harmful content on their platforms.

Firms point fingers

That these laws are the biggest threat to Big Tech sovereignty to ever come along is reflected in how the companies have reacted.

Following the reveal, Facebook came out in favor of the proposed legislation, trying to align itself with regulators while pointing fingers at tech device maker Apple. Facebook and Apple have repeatedly butted heads over Apple features that support data protection.

"We have long called for regulation on harmful content and have actively contributed to several European initiatives in this area," the social media company said in a statement. "Apple controls an entire ecosystem from device to app store and apps, and uses this power to harm developers and consumers, as well as large platforms like Facebook."

Despite facing a common enemy, Facebook's response shows that pushback to the legislation is unlikely to be a coordinated effort. Instead, companies may try to cast their peers in a negative light, hoping to distract attention from themselves.

Apple has also tried to distance itself from the social media giant, previously commenting that the sweeping legislation "may not be appropriate" for a company that makes communication devices.

"An advertising-driven user generated service," like Facebook, on the other hand, "will likely have higher levels of exposure to illegal content than a curated or paid content service," Apple wrote in a feedback brief to the European Commission.

Entering a new era

Tech companies are now caught in a difficult balancing act. They'll need to keep public opinion in their corner, while at the same time fighting laws designed to protect that same group.

Especially worrying for them is the growing support for greater regulation across the political spectrum. Under the current Republican administration in the United States, Big Tech has experienced its greatest crackdown to date. This is likely to intensify when Democrat Joe Biden takes over as president in January, ushering in a greater openness to regulation.

In Europe, even more traditionally business-friendly economies like the Netherlands, a tax haven for several international companies, have called for many of the actions outlined in the proposed legislation. Ireland, the European headquarters of many of these companies, is likely to push back but will find itself in the minority.

Even the companies with all the data in the world don't know how this will play out, or how far it could go. While the European Commission has said it would like to avoid breaking up one of the companies, the possibility is explicitly on the table. This is all coming just a week after the US Federal Trade Commission filed suits seeking exactly that in the case of Facebook and its subsidiaries Instagram and WhatsApp.

It's likely to take years for the legislation to be finalized. In the meantime, we can expect the Big Tech lobby to throw everything it has at preserving the freedoms they've enjoyed so far. How the next years will play out is hard to say, but what is clear is that the era of the original tech giants is coming to an end.