Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Monday, November 29, 2021

Europe plans to regulate big tech

The European Parliament will begin discussing from the middle of next year two bills that empower consumers and regulators and puts limits on the predatory market practices of Google, Facebook, Amazon, Apple and Microsoft.

The European Union is on the way to becoming the first global power to regulate core aspects of big tech business: if two specific rules are passed, Amazon, Apple, Microsoft, Google and Facebook should stop selling their own services with privileges within of their platforms. This is the case of Google's advertising service. The project requires it to give space to other ad servers and providers to compete on equal terms with Google Adsense within the Google platform. For this to happen, the European Parliament should fulfill its commitment to start dealing with the two bills in 2022. Both texts were presented by authorities of the European Commission in December 2020 as the European “digital package.” One is the Law of Digital Services, and the other, the Law of Digital Markets.

The measures are intended to determine how the EU regulates digital markets. Large fines and breaches are threatened for non-compliance. It proposes that if companies violate the rules, they could be forced to deliver up to 10% of their European turnover. And "repeated offenders" are warned that they could be forced to sell "certain companies, where there is no other equally effective alternative measure to ensure compliance."

These are the rules. The objective with the Digital Services Law is to unify various national criteria in a single set of rules for all the countries of the Union. In terms of discourse, the text advocates greater online security for European users, greater protection of freedom of expression and greater control over large technology companies, including holding them accountable.

Among the novelties that this project adds is the introduction of a sliding scale according to which larger and more influential companies assume more obligations. Thus, for example, all Internet companies must provide users with a way to get in touch and the means to view their terms and conditions. Similarly, online platform operators will need to prioritize complaints raised by so-called trusted flaggers, which have a history of highlighting valid issues.

Likewise, all marketplaces will have the responsibility of tracking the legality of the products offered on their platform. This will involve verifying the identity of who your sellers are before they can enter the platform. Nowadays, many marketplaces do this work, but if illegal merchandise appears, they are not legally responsible for it. If the norm is voted, they would become responsible.

When it comes to public scrutiny, the top players will have to undergo an annual independent audit to verify that they are following the rules. In addition, once a year they will need to publish a report on the management of the main risks, including users who post illegal content, misinformation that could influence elections and the unjustified targeting of minority groups.

No privileges. The Digital Markets Law, meanwhile, focuses on regulating large firms that are behind digital services offering their own products. Clearly, its universe is search engine operators, social networks, chat applications, cloud computing services and operating systems, among others.

The new rules for this group would include the obligation to inform the regulator of any planned acquisition of another service; not treat their own service more favorably than rivals when deciding in which order to display them on the screen; not use the data collected through its main service to launch a product that will compete with other established companies; allow users to uninstall pre-installed apps on their platform and use different software. The commission could impose fines of up to 10% of a company's annual turnover in Europe under the Digital Services Law and 6% under the Digital Markets Law.

 

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