The European Parliament and Council reached a provisional agreement on the Digital Markets Act, regulation targeting online advertising, messaging services and other practices of large technology platforms.
“The agreement ushers in a new era of tech regulation worldwide. The Digital Markets Act puts an end to the ever-increasing dominance of Big Tech companies,” Parliament’s Internal Market and Consumer Protection Committee Rapporteur Andreas Schwab said in a news release. “From now on, they must show that they also allow for fair competition on the internet. The new rules will help enforce that basic principle. Europe is thus ensuring more competition, more innovation and more choice for users.”
The Digital Markets Act introduces do's and don’ts for “core platform services,” including social networks and search engines, defined as “gatekeepers” — companies with a market value of more than 75 billion euros or an annual turnover of 7.5 billion. Under the legislation, personal data for targeted advertising will only be allowed with a gatekeepers’ explicit consent and gatekeepers will be required to give users choice over their browser, virtual assistants or search engines.
The regulation also requires that large messaging services including WhatsApp and Facebook Messenger will have to “open up and interoperate with smaller messaging platforms, if they so request,” according to Parliament’s press release.
The DMA was tabled 18 months ago alongside the Digital Services Act, which includes provisions on “dark patterns” and children’s privacy protections, European Commissioner for Competition Margrethe Vestager said during a press conference. While work on the DSA continues, DMA agreement followed “a lot of discussions in the trilogue about the scope of obligations,” Vestager said, as well as “heated debates” and “real political engagement” throughout negotiations. She added the ban on data collection for purposes of targeted advertising without “effective consent” was added through that process.
“What we have learned over these years is we can correct in specific cases, we can punish illegal behavior, but when things become systemic then we need regulation as well, because if there is a systemic misbehavior, if there are entrenched positions, then we need regulation to come in,” Vestager said. “For companies that play a role as gatekeepers now the Digital Markets Act will set the rules of the game.”
A finalized version of the DMA will face an upcoming final vote before Parliament and would take effect “sometime in October,” Vestager said. Gatekeepers that do not comply could face fines of up to 10% of total worldwide turnover, with the fine increasing to 20% for repeat violations.
“I think we have created something with an original architecture that’s effective, with more challenging obligations,” Vestager said. “We still have the DSA ahead of us and it has been complicated but successful to find the division of work between the two when it comes to targeted advertising and minors, but there is also democracy in this proposal because a fair marketplace is part of every democracy.”
The regulation has faced concerns over unfairly targeting American companies, including from tech industry groups and companies. An Apple spokesperson told Politico the company is concerned some provisions “will create unnecessary privacy and security vulnerabilities for our users while others will prohibit us from charging for intellectual property in which we invest a great deal.”
Meanwhile, Columbia Law School Henry L. Moses Professor of Law and International Organization Anu Bradford told The New York Times the DMA is gaining global interest.
“Everyone is watching the DMA, be it the leading tech companies, their rivals or foreign governments,” Bradford said. “It is possible that even the U.S. Congress will now conclude that they are done watching from the sidelines when the EU regulates U.S. tech companies and will move from talking about legislative reform to actually legislating.”
Photo by Christian Wiediger on Unsplash
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