Big Tech firms including Google parent Alphabet Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), Apple Inc (NASDAQ:AAPL) and Amazon Inc (NASDAQ:AMZN) are facing the spectre of increased pressure in the US, the UK and the European Union as regulators move to curb what many see as the corporation’s excessive dominance of the sector.
On Tuesday, the European Commission, the EU’s executive body, is set to publish two pieces of legislation, the Digital Services Act (DSA) and the Digital Markets Act (DMA), both of which are reported to include provisions that could see tech companies fined as much as 10% of their turnover for serious breaches of the bloc’s competition rules, penalties can also be imposed for firms that fail to police their platforms for illegal content.
Other proposed changes could include mandatory inter-app messaging, allowing users to send messages across different platforms that are currently separate such as WhatsApp and Viber.
However, perhaps the most worrying provision for the tech giants in the DMA is one that stipulates that if a firm is fined three times within five years it will be classed as a repeat offender and regulators will move to break up the business, according to an FT report.
The draft legislation marks the latest salvo against Big Tech by EU regulators, who so far this year have launched a number of actions designed to bring the massive firms to heel amid increasing outrage over their monopolisation of the sector as well as multiple cases of tax avoidance.
In November, EU antitrust regulators unveiled formal charges against Amazon over its treatment of third-party merchants on its website.
The bloc also rounded on Apple in June, launching tow probes into the tech group amid concerns that the terms and conditions in the company’s App Store and Apple Pay functions may be violating competition rules.
UK draws up new content rules
Meanwhile, the UK is currently working on its own batch of new rules for the industry, with the government publishing plans for online safety laws that could see firms facing billions of pounds in fines if they fail to remove illegal and harmful content from their platforms.
The new legislation will create new ‘duty of care’ requirements for platforms such as Google-owned YouTube and Facebook-owned WhatsApp to remove and limit the distribution of illegal materials such as those pertaining to child sex abuse or terrorism.
If companies fall foul of the rules, which are to be enforced by Ofcom, they could face fines of up GBP18mln or 10% of global turnover, whichever is higher.
Meanwhile, last week the Competition and Markets Authority (CMA) published advice to the government suggesting a new legally binding code of conduct for tech firms as well as “enhanced merger rules” that will allow it to closely scrutinise acquisitions by companies deemed to have “strategic market status”, those that have “substantial, entrenched market power and where the effects of that market power are particularly widespread or significant”.
The regulator has also proposed a new Digital Markets Unit to regulate the sector and ensure compliance.
“To ensure the UK can continue to enjoy a thriving tech sector, consumers and businesses who rely on tech giants like Google and Facebook should be treated fairly, and competitors should face a level playing field – enabling them to deliver more of the innovative products and services we value so highly”, CMA chief executive Andrea Coscelli said in a statement.
“For that to happen, the UK needs new powers and a new approach. In short, we need a modern regulatory regime that can enable innovation to thrive, while taking swift action to prevent problems”, the CEO added.
Facebook under fire
Moves by both UK and EU regulators follow similar actions by US regulators this month to clamp down on the dominance of Big Tech firms.
Last week, the Federal Trade Commission (FTC) and a coalition of 48 US states filed a collection of lawsuits against Facebook alleging that the social media giant has engaged in anticompetitive behaviour and abused its market position to crush potential rivals.
The regulator has accused Facebook of blocking smaller competitors from gaining market share and that the company is “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct”.
The antitrust lawsuits also contain requests by officials for the courts to consider breaking up the company, although Facebook has said the acquisitions were previously approved by regulators and the cases amount to an effort by the FTC to have a “do-over” of its previous decisions to approve the mergers.