The European Commission is arming itself to the teeth in its fight with US tech groups like Amazon Facebook and Alphabet. However, upon contact, the hammer may foam.
The czar of the competition, Margrethe Vestager, revealed yesterday the Law of Digital Markets and the Law of Digital Services. The first aims to place protective guardrails for companies through a series of “things to do” and “things not to do” to avoid crushing the competition.
It would require companies with more than € 6.5 billion in annual revenue in Europe, an equity value of € 65 billion, and at least 45 million monthly active users in the region to stop favoring their own services on their platforms, or they will take a risk. to fines of up to 10% of total income.
The second regulation would force online giants to quickly remove harmful and illegal messages from social media. They would also have to be transparent about the algorithms that govern all of their products, from social media news to search engine rankings.
Serious violations of “very large rigs” would be punished with fines of up to 6% of sales. That means Facebook could theoretically be fined $ 5 billion, based on Refinitiv’s 2020 median estimates, if found to be slow to fight misinformation or extremist content.
The first caveat is that these rules could be watered down as they make their way into the European Parliament and eventually the Council. Even if the toughest measures survive the legislative process in Brussels, they may not make much of a difference. Vestager had already fined Google a total of 8 billion euros before 2020, and yet it continues to dominate searches with more than 90% of the European market, according to data collector Statcounter.
Second, the essence of Vestager’s approach is to regulate the behavior of the digital giants, rather than challenging their dominance. The latter goal could have been achieved with strict requirements on data sharing and basic technical standards, such as forcing social networks to create technology that allows them to interact with each other, eroding powerful network effects.
This indicates that European regulators are only trying to induce big tech companies to make changes, a less radical approach than that in the United States, where some authorities are trying to push for unbundling.
Europe is figuring out how to live with the tech giants, rather than trying to dismantle them. Bosses like Mark Zuckerberg can probably deal with that.