Yahoo Finance Big tech faces multibillion fines and break-up threats under new EU laws
The European Commission (EC) has proposed an “ambitious reform of the digital space” including laws that, if tech giants fail to comply, could see them face multibillion fines or even the threat of divesture.
The Digital Services Act and the Digital Markets Act aim to “better protect consumers and their fundamental rights online, and will lead to fairer and more open digital markets for everyone,” the Commission said.
The EC warned in a statement that non-compliance “could include fines of up to 10% of the gatekeeper's worldwide turnover, to ensure the effectiveness of the new rules.”
These gatekeepers were described as platforms that have a significant impact on the EU’s internal market, which serve as an important gateway for business users to reach their customers. It could include tech giants Facebook (FB) and Google (GOOG), for whom 10% of turnover would mean billions of dollars.
The EC added that “for recurrent infringers, these sanctions may also involve the obligation to take structural measures, potentially extending to divestiture of certain businesses, where no other equally effective alternative measure is available to ensure compliance.”
The idea is to support the scaling up of smaller platforms, small and medium-sized enterprises, and start-ups, providing them with easy access to customers.
The new laws cover all digital services, including social media and online market places.
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The EC’s commissioner for internal market, Thierry Breton, said: “Many online platforms have come to play a central role in the lives of our citizens and businesses, and even our society and democracy at large. With today's proposals, we are organising our digital space for the next decades.”
“With harmonised rules, ex ante obligations, better oversight, speedy enforcement, and deterrent sanctions, we will ensure that anyone offering and using digital services in Europe benefits from security, trust, innovation and business opportunities,” he added.
The EU said that “online platforms have created significant benefits for consumers and innovation, but have also been used as a vehicle for disseminating illegal content, or selling illegal goods or services online.
“Some very large players have emerged as quasi-public spaces for information sharing and online trade,” it noted.
“Platforms that reach more than 10% of the EU's population (45 million users) are considered systemic in nature, and are subject not only to specific obligations to control their own risks, but also to a new oversight structure,” the EU warned.
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“This new accountability framework will be comprised of a board of national Digital Services Coordinators, with special powers for the Commission in supervising very large platforms including the ability to sanction them directly,” it said.
The European Parliament and the Member States will discuss the Commission's proposals in the ordinary legislative procedure.
Earlier this month, the head of the European Commission had vowed to create a “level playing field” for Europe’s tech startups by reigning in the power of Big tech players like Facebook, Google and Amazon (AMZN).
And earlier today, the UK government proposed that top tech companies will need to remove and limit the spread of illegal content such as child sexual abuse and terrorist material, or face huge fines of up to £18m ($24m) or 10% of annual global turnover, whichever is higher.
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