Regulators crack down on Massive Tech as Europe unveils Digital Providers Act
(COMBO) This combination of images, which was created on July 7, 2020, shows (LR) Facebook CEO Mark Zuckerberg on May 23, 2018 in Paris, Google CEO Sundar Pichai Berlin on January 22, 2019, Apple CEO Tim Cook on October 28, 2019 in Jeff Bezos, Founder and CEO of New York and Amazon, on June 6, 2019 in Las Vegas, Nevada.
US tech giants have grown too big to fit in and need to be kept informed – this is the message that governments around the world shared over the course of 2020, with tensions crescendoing in late 2020.
For years, nations like Google, Facebook and Amazon have allowed “move fast and break things” with relatively little control or accountability. But now, more than ever, US tech giants are being targeted by regulators in their home country as well as in Europe and the rest of the world.
New laws for Big Tech Police Force are being heralded by countries and regions at a speed of knots that will force some of the world’s most valuable companies to transform the way they do business and make their billions. There is also talk of breaking up monopolies.
Dom Hallas, executive director of the Coalition for the Digital Economy, a UK tech lobbying group, told CNBC that other nations are likely to follow in the footsteps of US regulators.
“I think the game changer is the US,” said Hallas. “Ultimately, other jurisdictions will do what they do. If the US chooses them, that’s the ball game. It’s not clear we’re still there, but we’re definitely closer.”
Europe’s digital services law
The European Commission, which is the EU’s executive branch, on Tuesday presented its proposals for the highly anticipated laws on digital services and digital markets. The proposals will only be implemented if the European Parliament votes in favor.
The measures are intended to “revise” the digital market in Europe and force the technology giants to act in new ways. The legislation, which is the biggest revision in decades, focuses on increasing competition and holding online platforms accountable for the content they host.
If technology giants fail to comply, they face fines of up to 10% of their annual sales. For Google that would be 16.2 billion US dollars, for Facebook 7.1 billion US dollars.
If they engage in repeated anti-competitive behavior, the EU could try to break them, according to a Financial Times report on Tuesday.
“Big tech must use its influence, power and potential both ethically and safely,” said Tony Hughes, chief technology officer at Civica, which develops software for the public sector. “In one of the most difficult periods in human history, it is more important than ever to move forward politically and economically, and that includes legislation to provide a solid deterrent to misuse of information.”
However, Anders Borg, Sweden’s former finance minister and advisor to New York-based enterprise software company IPsoft, said that more regulation of the technology is likely “counterproductive” for Europe.
“Europe has a weak business climate and spends too little on STEM education, digital infrastructure and R&D,” said Borg. STEM is short for science, technology, engineering and mathematics.
“Antitrust policy should be based on an assessment of consumer impact and innovation,” said Borg. “There is a clear risk that regulatory ambitions in the EU will actually lead to less price pressure and even slower technological development.”
Rich Pleeth, a former Google marketing executive who now works as a business consultant, told CNBC that he believes Facebook will be hit hardest by the law, followed by Twitter and YouTube.
“They just can’t keep up with the amount of misinformation being shared on their websites,” he said.
Ofcom fines for harmful content
Elsewhere, the UK announced Tuesday that technology regulator Ofcom would fine social media companies up to £ 18 million (US $ 24 million) or 10% of their annual global sales, whichever is the case is higher if they do not rid their platforms of illegal and toxic content. Managers could be held personally liable for failure to comply with a legally binding duty of care.
Social media services that host user-generated content or allow people to talk to others online must remove and limit the distribution of content that contains child sexual abuse, terrorist material, or suicide, according to the government. You also need to do more to ensure children are not exposed to caregiving, bullying and pornography.
Facebook, Instagram, TikTok, Twitter and other popular social networks have to set clear terms and conditions that specify how to deal with content that is legal but can cause significant physical or psychological harm to adults, e.g. B. Misinformation About Coronavirus Vaccines.
TikTok announced Tuesday that all posts related to vaccines will be bannered. Clicking the banner will take you to information published by reputable sources such as the World Health Organization.
FTC antitrust lawsuits
The Federal Trade Commission (FTC) and a coalition of attorneys-general from 48 states and territories filed two separate antitrust lawsuits against Facebook last Wednesday.
The suits target two of Facebook’s top acquisitions: Instagram and WhatsApp. Both lawsuits seek remedial action for the alleged anti-competitive behavior that could lead Facebook to sell the two apps.
Hussein Kanji, a venture capital investor at Hoxton Ventures in London, told CNBC that the lawsuit is likely to drag on. “The FTC is not looking for a small fine, it is looking for a breakup, so it’s war,” he said. “I don’t think we’ll have any clarity anytime soon as to how this will develop.”
Pleeth said, “With Facebook’s antitrust lawsuit, we’ll see an ongoing downward spiral in FB share price, but the reality is that Instagram is more valuable as a stand-alone public company.”
Another major battle between Apple and developers developing apps for the App Store is brewing. Apple currently receives a 30% commission for in-app purchases, but companies like Spotify and Fortnite maker Epic Games consider this to be unfair and anti-competitive. The latter has filed a lawsuit while Apple is demanding damages for breach of contract.
– CNBC’s Ryan Browne and Meg Graham contributed to this article.