World News – AU – Tech giants prepare for tough new EU laws

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Many of the world’s leading technology companies have a presence in Ireland, including search giant Google. File image: Stephen Collins

US tech giants are bracing themselves for new laws that could force profound changes in the way they work in Europe, with substantial fines or, in extreme cases, orders to exterminate the worst criminals.

The new law on digital markets, to be proposed by the European Union on Tuesday, is aimed at so-called gatekeeper companies, platforms that have the power to control sales in their markets.

These platforms are prohibited from giving preferential treatment to their own products and services as well as other practices. For example, according to a person familiar with the matter, they are not allowed to use data from competitors selling in their market or use data about competitors obtained through promotional activities.

The EU will define gatekeeper platforms based on a combination of different criteria, including turnover, user numbers, impact on the European single market and the importance for the competitiveness of competitors. The authorities will regularly check whether companies should still be appointed gatekeepers or whether new ones are emerging.

With separate policy measures, some platforms can also face penalties for failing to quickly remove illegal content from their websites.

Wondrous web companies like Amazon and Google, both of which have a strong presence in Ireland, have been the target of a regulatory onslaught from Brussels for years. But to successfully break what the EU says is a stranglehold on digital ecosystems by a handful of giants, officials say they need new tools.

The tech companies say the planned measures could prevent them from introducing new services or challenging established competitors in new markets.

« These would be big changes, uncharted waters, » said Kay Jebelli, competition and regulatory advisor at CCIA, an industry association that represents platforms like Facebook and Amazon.

The EU’s plans come from regulators around the world putting pressure on tech giants who they believe have become too big, too powerful and too profitable. Facebook is already at risk of business collapse in the US after it was sued by antitrust officials and a coalition of states seeking to wind up their Instagram and WhatsApp acquisitions.

Constant expansion is part of the DNA of the giants of Silicon Valley, but it’s at the heart of what EU antitrust authorities are increasingly scrutinizing in their investigations into companies like Google and Apple – whether powerful platforms are leveraging their market position in an area Strengthen entry into another. The allegedly unfair trade practices emerging from these investigations will affect Tuesday’s legislation, officials say.

If companies identified as gatekeepers fail to adhere to the new rules, they may face ever increasing fines until they liquidate their companies in Europe – a far more important threat to business.

But the threat can amount to a paper tiger. The EU antitrust authorities already have the power to order a structural separation in antitrust inspections, but have never used this.

« It’s kind of a nuclear option, » said Margrethe Vestager, EU antitrust chief and tsarina for digital regulation, at the online web summit in early December.

She said that all other options must be ruled out and that her team has not yet looked into such a case. It is unclear whether such a decision will be effective in restoring competition within a foreseeable period. « We’d spend a lot of time in court, » she said.

The second regulatory proposal to be released on Tuesday, the Digital Services Act, also faces heavy fines, in this case if illegal content is not removed quickly enough. Tech giants, however, appear to have been spared potentially the greatest threat to their business.

Tech companies have expressed concerns that in modernizing long-standing internet rules, the EU could remove the legal protections that protect platforms from liability for what users post on their website. However, the EU has stated that it will not completely remove liability protection.

Bloomberg

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World news – AU – Technology giants prepare for tough new EU laws

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