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The EU Is Pushing Two Massive Digital Laws To Tame Big Tech

EU Big Tech

Three years ago, the European Union introduced one of the strictest digital privacy laws ever: the Data Protection Regulation aka GDPR, a law that requires businesses around the world transacting business within the EU to protect the personal data and privacy of EU citizens. With many companies labeling the law ‘onerous,’ ‘byzantine,’ and ‘draconian’, it seemed like it was just a matter of time before companies that handle large volumes of personal data started finding themselves in a bind.

And it was. Last year, the Court of Justice of the European Union (CJEU), the EU’s top court, agreed with Austrian lawyer and privacy activist Max Schrems that the United States Privacy Shield framework is invalid.  According to the CJEU ruling:

“A quick analysis of the HTML source code of major EU webpages shows that many companies still use Google Analytics or Facebook Connect one month after a major judgment by the Court of Justice of the European Union (CJEU) – despite both companies clearly falling under US surveillance laws, such as FISA. Neither Facebook nor Google seem to have a legal basis for the data transfers. Google still claims to rely on the ‘Privacy Shield’ a month after it was invalidated, while Facebook continues to use the ‘SCCs’, despite the Court finding that US surveillance laws violate the essence of EU fundamental rights.”

Never mind the fact that the United States Privacy Shield framework, one of the two main ways of sending personal data about EU citizens across the Atlantic for processing and storing, was approved by the US and the EU just a couple of years ago.

But if U.S. tech behemoths are already struggling to comply with Europe’s flagship data rules, then the latest developments in the space will be even more disconcerting.

The EU has just added two more laws to its alphabet soup of digital acts: the Digital Markets Act (DMA) and Digital Services Act (DSA), two of the latest digital competition and content moderation laws meant to tame Big Tech and tackle illegal content online.

 

The EU’s competition and digital policy chief, Margrethe Vestager, has urged the European Parliament and European Council to approve rules to curb the power of Big Tech as a matter of urgency, even if they are imperfect.

Meanwhile, France's Digital Minister Cédric has called the two draft laws "potentially the most important in the history of digital regulation, both when it comes to the economic side and content side."The French government is poised to take over the presidency of the EU Council in January, and is keen to clinch a final deal on the new laws ahead of the country's presidential election in April.

Taming Big Tech

The Internet was once hailed as a powerful democratizing force--enabling innovative start-ups to compete with established businesses, disrupt entire industries, and create new ones. But as some of those startups grew into behemoths, they turned this force on its head. Far from leveling the playing field, Big Tech now largely owns it, and rather than democratizing the economy, the internet has ended up exacerbating the world’s inequality problem.

Silicon Valley’s most successful companies have amassed millions or even billions of users, while governments have slowly caught on to how these new digital businesses worked. Now, policymakers better understand the power that tech platforms wield by offering free services, which users pay for with data, and how these affect markets and society.

Last year,  the House Judiciary Committee published a pretty damning report concluding that four tech giants--Amazon, Apple, Facebook and Google--have transformed from “scrappy, underdog start-ups that challenged the status quo into the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

There’s an emerging consensus that Big Tech has grown too big and too powerful, and something needs to be done. 

It’s time for a reset.

The US Open App Markets Act, DMA and DSA are all attempts to level the online playing field using various strategies.

The Open App Markets Act is designed to prevent Apple and Google from only selling approved apps in their app stores. The Act would make several changes to app stores, including:

  • Allow a legal avenue for third-party app stores, rather than only allowing “the” app store for Apple or Google devices.
  • Banning companies like Apple or Google from privileging their own in-house apps in searches.
  • Bar companies like Apple or Google from requiring apps available on its app store to use a payment system run by the company itself.

A couple of weeks ago, Apple was ordered to comply with the court order over in-app payments in a court battle with Epic Games.

Meanwhile, the DMA is meant to force so-called gatekeepers, such as Google, to ensure more equal terms on their online platforms, while the DSA seeks to clarify the way large online companies should keep illegal content off their platforms.

Unlike his predecessor, President Joe Biden has not spent much time bashing Big Tech, but his nominees speak volumes about his tech policies. Indeed, Biden has appointed several friends of Barry Lynn, founder of the Open Markets Institute, an anti-monopoly group that advocates for breaking up tech giants, to key tech surveillance posts.

Lina Khan, who worked at the Open Markets Institute for seven years, now chairs the Federal Trade Commission (FTC), an agency charged with protecting consumer privacy and enforcing antitrust law. 

Tim Wu, formerly on Mr Lynn’s advisory board, has a post advising the White House on competition and technology policy. In July, Biden issued a strongly worded executive order, written by Mr Wu, bemoaning ‘corporate concentration.’

As you might expect, Big Tech is fighting back furiously.

Back in August 2021, Apple and Google stepped up their efforts by backing a lobbying group to advocate against the Open App Markets Act. And, it appears their efforts may finally be bearing fruit. About a week ago, it was announced that the U.S. Chamber of Commerce will challenge Federal Trade Commission Chairwoman Lina Khan's authority, claiming she is overstepping her mandate.

"It feels to the business community that the FTC has gone to war against us, and we have to go to war back," Suzanne Clark, the chamber's president and CEO, told the WSJ in an interview.

Big Tech can also take some comfort in the fact that Congressional action is far from guaranteed, with partisan politics likely to still get in the way of any new anti-tech laws. After all, tech executives are big Democratic funders, with some Californian Democrats in Congress already having opposed several tech bills.

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