European Union lawmakers reached a broad agreement on new digital platform rules that are aimed at sharply reducing the power of tech giants.
A review of these platforms’ dominance began last year, amid widespread concern in Europe that companies such as Google, Facebook, Apple, and Amazon wielded too much control over the buying and selling of physical and virtual goods and services online.
“Today’s agreement marks an important milestone of the Digital Single Market that will benefit millions of European companies relying on digital platforms to reach their customers,” said EU Vice-President for the Digital Single Market Andrus Ansip in a statement. “Our target is to outlaw some of the most unfair practices and create a benchmark for transparency, at the same time safeguarding the great advantages of online platforms both for consumers and for businesses.”
European leaders have been taking a harder line against U.S. tech giants in recent years across such issues as taxes, privacy and data, and antitrust. Google in particular has been the target of ongoing ire, and is facing a $5 billion fine for alleged abuses of its Android platform and another $2.72 billion fine in a search antitrust case. Apple is still appealing a ruling that would require it to pay $14.5 billion in taxes amid allegations it used Ireland as a tax haven.
But these new rules aim to address more fundamental fears about the roles these companies play in the daily lives of EU residents. The idea is to curb what the EU sees as unfair practices by app stores, search engines, e-commerce sites, and even hotel booking services.
While the EU says the rules target about 7,000 online platforms, the ones most likely to be impacted are Amazon, eBay, Apple’s App Store, Google’s Play, Facebook, and Booking.com.
The goal is to give small businesses, who are increasingly dependent on such platforms, more leverage when they have grievances. For instance, the platforms will now be required to give clear, detailed explanations if they suspend an account, provide clearer terms of service, improve dispute resolution programs, and offer greater transparency.
It’s this part that is likely going to cause the biggest fight between Europe and these tech giants. The EU wants the companies to disclose information such as how they rank goods and services, information companies typically insist must remain secret to avoid manipulation.
These companies must also make clearer when they are selling their own products and services on their platforms in competition with some of these small businesses. The EU says such sales must be “exhaustively disclosed” going forward.
In addition, there are greater disclosures required around data being gathered on these platforms, and how it is being used.