Electrical Equipment / Components & Telecoms

After months of negotiations and procedural hurdles, the EU has passed a pair of landmark bills aimed at reining in the powers of big tech. The Digital Markets Act and the Digital Services Act are designed to promote fairer competition, improve privacy protections, and prohibit the use of some of the more egregious forms of targeted advertising and misleading practices.

For example, the Digital Services Act focuses on online platforms such as Facebook, Amazon and Google. Their mission is to be more proactive in moderating content and preventing illegal or unsafe goods from being sold on their platform. Users will also be able to understand how and why the algorithm recommended something to them, and challenge any algorithmically made moderation decisions. Finally, companies will no longer be able to use sensitive personal data for ad targeting, sell ads to children, or use dark modes -- deceptive page designs that can manipulate you to say "yes" to something, even if you'd prefer to say "yes" No", such as joining a service or preventing you from leaving a service you no longer want to use.

These obligations operate on a sliding scale, so the largest platforms will have the largest obligations. Platforms with 45 million or more monthly users will be independently audited to ensure they are protected against fake news and illegal content. The platforms must also open up their algorithms and data to (approved) researchers, enabling them to study the possible impacts and potential harms of the system.

Meanwhile, the Digital Markets Act is more focused on preventing platform incumbents like Google, Microsoft and Apple from abusing their scale. This includes better interoperability with smaller rival services, ensuring that files can be sent between systems. There is also a big exception for app stores, where developers now have the right to contact their customers for transactions without going through the relevant platform holder. Platform owners will no longer be able to give preferential treatment to their own systems, such as Google promoting its own shopping service better than a competitor's.

The EU has given full support to both bills, and regulators can impose penalties of up to 10% of the previous year's total global turnover if they find violations. However, if officials find "repeated violations", the figure rises to 20% of global turnover. That's a huge number, and even Apple can't afford recurring losses. Despite the same GDPR provisions, the EU still has questions to answer about how much effort, time and money it is prepared to put behind the institutions that oversee big tech companies.

Now that it's passed, the Digital Services Act will come into force on January 1, 2024 (barring some procedural delays), while the Digital Markets Act will come into force shortly after, with major platforms (known as "gatekeepers" ) will have six months to do their thing before the new rules apply to them.