EU Introduces Digital Markets Act to Counter Tech Giants’ Dominance

The European Union (EU) has taken steps to counter the digital dominance of six big tech companies, including Amazon, Apple, and Microsoft. The EU’s Digital Markets Act aims to provide users with more choices and promote fair competition. Google’s parent company, Alphabet, Facebook’s owner, Meta, and TikTok’s parent company, ByteDance, have also been classified as online “gatekeepers” and will be subject to the strictest requirements of the act.

Under the Digital Markets Act, European users of major social media and chat services may soon have the ability to send messages to rival platforms, opt-out of personalized ads, and choose their preferred search engine or browser. This is part of a broader update to the EU’s digital rulebook, which began to take effect this year.

The EU’s executive body, the European Commission, defines digital platforms as gatekeepers if they provide “core platform services” that act as key gateways between businesses and consumers. Examples of these services include Google’s Chrome browser, Microsoft’s Windows operating systems, chat apps like Meta’s WhatsApp, social networks like TikTok, and online marketplaces like Amazon’s Marketplace and Apple’s App Store.

The six companies named as gatekeepers now have six months to comply with the requirements of the Digital Markets Act. These requirements will lead to significant changes in how they operate. For instance, tech companies will no longer be allowed to prevent consumers from connecting with businesses outside their platforms. This could push Apple to open its App Store further, as the company has faced criticism for its restrictions on third-party payment systems.

Other provisions include requirements for messaging services to work with one another, bans on platforms giving preferential treatment to their own products in search results, and restrictions on combining personal data for targeted advertising. Non-essential software or apps, such as web browsers, will also no longer be installed default. Instead, consumers will be given a choice screen to select their preferred search engine and browser.

The Digital Markets Act aims to create a fairer digital marketplace with more options for users and fewer barriers for smaller competitors. The EU plans to enforce the act with fines of up to 10% of a company’s annual global revenue for violations, or even potential breakups of companies in cases of repeat offenses.

Sources: European Union, Digital Markets Act