Europe shifts tactics to limit tech’s power
New policies could lead to a major overhaul of EU’s digital economy
LONDON— In Brussels, European Union leaders are pursuing a new law that could make it illegal for Amazon and Apple to give their own products preferential treatment over those of rivals that are selling on their online stores.
In Britain, officials are drawing up a law to force Facebook to make its services work more easily with rival social networks, and to push Google to share some search data with smaller competitors.
And in Germany, authorities are debating a rule that would let regulators essentially halt certain business practices at the tech companies during an antitrust investigation.
Europe’s lawmakers and regulators have shifted to a new stage in their battle to limit the power of the world’s biggest tech companies. While the region has long been at the forefront of using existing antitrust laws and levying multibilliondollar penalties against the tech giants, officials now say that those tactics have not gone far enough in altering the behaviour of Apple, Amazon, Google and Facebook.
So authorities in Brussels and other European capitals are pursuing at least half a dozen new laws and regulations that directly target the heart of how those tech companies’ businesses work. If enacted, the policies could lead to a major overhaul of Europe’s digital economy, where there are more than 500 million consumers, by regulating the tech companies more like traditional industries such as telecommunications and finance.
“This is a new phase,” Margrethe Vestager, the European Commission executive vicepresident who is leading the effort in Brussels to write new laws, said in an interview.
Vestager said the proposed laws would lower hurdles to force the tech companies to change and even restrict them from moving into new product areas. “At stake is whether or not these markets will be open and contestable and innovative, or if they will just be governed by these walled gardens of de facto monopolies,” she said.
Europe has embarked on its legal blitz just as the United States has started flexing its own tech regulatory muscles. On Wednesday, the chief executives of Amazon, Apple, Google and Facebook were grilled by lawmakers in a congressional hearing to scrutinize their power. All defended themselves against criticism from Democrats about anti-competitive business practices and accusations from Republicans that they were muzzling conservative voices. The momentum in the United States is set to grow. The Justice Department is expected to announce an antitrust case against Google in the coming weeks. The Federal Trade Commission and state attorneys general are also probing Facebook, Apple and Amazon for potential anti-competitive behaviour.
But the actions still lag those of Europe, where officials are coupling their new law-making efforts against Big Tech with more traditional tactics such as antitrust investigations. EU officials are investigating whether Apple’s App Store policies are anti-competitive, and are preparing charges against Amazon for abusing its e-commerce dominance to box out smaller rivals. The EU is also reviewing Google’s purchase of wearables maker Fitbit, while Britain opened an inquiry in June into Facebook’s acquisition of Giphy, a GIF company.
Amazon, Facebook, Apple and Google declined to comment.
For years, Europe set the standard in tech regulation — only to find that its efforts did not make much of a dent as the tech behemoths continued to grow.
Consider that the European Commission found Google guilty of antitrust violations three times between 2017 and 2019, resulting in fines of roughly 8.25 billion euros ($9.7 billion U.S. at current conversion rates). But the cases each took several years to complete, giving Google ample time to secure its dominance in online advertising, smartphone software and internet search. The monetary penalties, which are small for a company with more than $160 billion (U.S.) in annual revenues, remain tied up in court appeals.
Other legal efforts, such as Europe’s landmark privacy law called the General Data Protection Regulation, were aimed at many industries and were not just targeted at the tech companies. Since GDPR’s implementation in 2018, it has been faulted for lack of enforcement.
So over the past year, European regulators and lawmakers began a concerted effort to draw up new laws that specifically homed in on the tech companies’ businesses.
Much of the energy came from officials in Brussels, where EU leaders set policies for the 27-nation bloc. In December, Vestager, who had already spent five years as the world’s top tech industry watchdog, began a new five-year term leading digital policy and antitrust oversight. She and her colleagues vowed to take an even harder line.
They proposed new rules to make it easier for regulators to launch investigations against the tech companies. One proposed law, the Digital Services Act, would draw more business boundaries for search engines, marketplaces, social networks and app stores. Policy-makers are debating barring Amazon, Apple and others from giving their products preferential treatment in their digital stores. Vestager said there was broad political support for the ideas, which could become law by next year.
Among European countries, Britain has become particularly active in moving to rein in the tech giants. Lawmakers are now debating creating a regulator to focus on the largest tech companies, holding them to new codes of conduct so they do not use exploitative or exclusionary business practices.
“We have crossed a line,” said Andrea Coscelli, the head of Britain’s antitrust agency, the Competition and Markets Authority, which published a 400plus page report at the beginning of July accusing Google and Facebook of anti-competitive behaviour in online advertising. “Something needs to happen sooner rather than later, and it needs to be done in an intelligent way.”
Coscelli said the lack of specific tech regulation reminded him of the lax oversight of banks before the 2008 financial crisis. Regulators should treat the tech giants more like formerly state-owned enterprises such as British Telecom and Deutsche Telekom, he said. Starting in the 1980s, those companies were often blocked from practices like bundling new services at reduced prices, or moving into product areas where new companies were emerging. Europe is now considered among the world’s most competitive wireless markets.
In Germany, authorities said they were debating rules to restrict how the tech companies use their dominance in one area to enter new markets. In recent years, Apple has leveraged its strength in smartphones and tablets to subsidize its entrance into the video-streaming market, Google has used its search engine to offer travel services and Facebook has offered new e-commerce services off its base of social networking.
“If a platform is so big and if a platform has such a powerful position, there are opportunities to abuse this power,” said Andreas Mundt, Germany’s top antitrust regulator.
In France, policy-makers are debating a new law that would censor hate speech online, making Facebook, YouTube and Twitter legally liable for content posted by users, though the proposal is already facing legal challenges. Germany has adopted a similar proposal, and Britain and the European Union are considering such measures as well.
France is also leading an effort with Italy and the EU to force the tech companies to pay more taxes.
Many hurdles remain before the proposals become law. Some question whether the regulations would be effective, particularly if they take years to enact. Others said any laws could be watered down during the legislative process as companies pour money into lobbying, or that in a rush to get something done, flawed policy will be implemented.
“There is a desire to ‘go further,’ but European regulators are struggling to define the specific problems they want to fix,” said Joe McNamee, a veteran internet policy consultant in Brussels, who is particularly concerned about new online censorship rules. “Badly designed measures are unlikely to achieve their goals at the same time as creating collateral damage.”
William E. Kovacic, a professor specializing in antitrust law at George Washington University, said that even if many of the proposals do not become law, the increased scrutiny alone would lead the tech companies to change behaviour.
“It’s like the policeman at your elbow,” he said.
“At stake is whether or not these markets will be open and contestable and innovative, or if they will just be governed by these walled gardens of de facto monopolies.”
MARGRETHE VESTAGER EUROPEAN COMMISSION EXECUTIVE VICE-PRESIDENT