What's at stake as EU clashes with Big Tech?

Companies have six months to comply with new measures as Brussels says it wants to give customers more choice

Meta has had several bruising legal battles around the world over its business model. Reuters
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The EU on Wednesday said that six tech giants – Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft – have six months to comply with tough new measures that will allow more competition or face financial sanctions.

The highly anticipated announcement comes as tensions are rising between tech companies and the European Commission, and a month after Amazon became the first US company to challenge a separate EU tech legislation in court.

“With today’s designation we are finally reining in the economic power of six gatekeepers, giving more choice to consumers and creating new opportunities for smaller innovative tech companies,” said Internal Market Commissioner Thierry Breton.

More than 20 affiliated services have been designated, including popular social platforms TikTok, Facebook, Instagram and LinkedIn, as well as video-sharing platform Youtube and search engine Google and Amazon Marketplace.

Companies have until March to implement the measures, which include allowing business users to access the data they generate in their use of their platforms and to conclude contracts with competitors.

The companies will no longer be able to block users from uninstalling preinstalled software or apps and will not be able to rank their own products above products of other parties.

“Today, challengers [of these services] cannot exist because they either adapt or die. That’s something we’d like to change,” said a senior EU Commission official who briefed journalists anonymously to speak more freely.

These six companies, which concentrate unprecedented economic power, have been designated as “gatekeepers”, a reference to their role as a gateway between businesses and end users and their ability to force both sides to play by their rules.

To qualify, a gatekeeper must serve more than 45 million users a month, the equivalent of about 10 per cent of the population in the bloc of 27 European countries.

They must also serve over 10,000 active EU businesses.

The Commission will also open four investigations into companies that said they do not qualify as gateways despite meeting the thresholds.

Three of them are owned by Microsoft – Bing, Edge and Microsoft Advertising - and one, chat app iMessage, is owned by Apple.

Apple and Microsoft have argued that iMessage and Bing are insufficiently popular to fall under this designation, the Financial Times reported on Monday.

Microsoft has said that if covered by the new EU rules, Bing, which has a market share of only three per cent, would need to give users a choice of other search engines. This may end up boosting Google's market share, said the newspaper.

The Commission's investigations must be completed within five months.

The Commission has also opened a longer investigation into whether Apple’s iPadOS should be designated as a gatekeeper despite not meeting the thresholds.

It has agreed with Alphabet, Microsoft and Samsung not to designate Gmail, Outlook.com and Samsung internet browser as gatekeepers.

There will be fines of up to 10 per cent of a firm's global revenues for breaking some of the most serious competition rules, and even up to 20 per cent for repeat offenders.

"The ball is in the gatekeepers' camp," said a second senior EU official.

"The judge will be the consumers and businesses, and we are looking forward to their feedback on whether the obligations work in practise."

Regulatory uncertainty

Friction between the European Commission, the EU's legislative arm, and Big Tech has grown in the past months.

The companies designated on Wednesday are all American except for ByteDance, TikTok's Chinese owner.

EU officials said that they did not specifically target American companies but that these were the companies most used by European consumers.

They did not rule out designating European companies in the future.

In July, social media giant Meta delayed the launch in the EU of social media platform Threads, a rival to X, formerly Twitter, citing regulatory uncertainty.

Earlier this week, Meta said that it will pull the plug on the Facebook News tab in December in its biggest European markets – the UK, France and Germany.

Users of the world's biggest social media platform will still be able to read and share news on their feeds, the company said in a blog post.

But Meta would no longer support the news tab and would not enter into any more deals with publishers to supply content in those countries, which account for more than 130 million users.

The Silicon Valley titan has had several bruising legal battles around the world, with legislators and media organisations accusing it and other firms of profiting from their content but giving nothing back.

Meta has barred users in Canada from seeing or sharing links to news items after the government passed legislation forcing the platform to compensate the providers.

In a blog post published on Tuesday, Meta emphasised that its wider strategy for Facebook was to move away from news content.

“We know that people don't come to Facebook for news and political content – they come to connect with people and discover new opportunities, passions and interests,” the firm wrote.

“News makes up less than three per cent of what people around the world see in their Facebook feed, so news discovery is a small part of the Facebook experience for the vast majority of people.”

Updated: September 06, 2023, 11:44 AM