Clamping Down on Big Tech: The Digital Markets Act

While the EU works towards regulating the market power of Big Tech companies through new legislation, the Biden administration has tried to limit this by contacting MEP Andreas Schwab to ensure that new changes do not threaten the oligopoly of Amazon, Google, Facebook and Microsoft.

US official Gina Raimondo’s counsellor wrote to Schwab, who is leading the discussions surrounding the Digital Markets Act in Brussels, to express concerns regarding the new regulations and to request that the rules be further extended to cover companies outside of the US.

The new anti-trust Digital Markets Act (DMA), which will come into force in 2023, entails classifying large online platforms as “gatekeepers”. To fit the criteria as a gatekeeper, a company must have a strong economic position with activity across multiple EU states, the ability to link a large user base to an array of businesses, and a stable position in the market over time.

The DMA aims to inhibit gatekeepers from treating services and products offered by them as superior to those offered by other vendors and third parties. Gatekeepers will also not be allowed to prevent users from uninstalling any pre-installed software against their wishes and will be unable to stop consumers from developing links with businesses beyond the control of their platform. While these policies offer greater peace of mind to concerned consumers and will increase competition for smaller-scale vendors, US officials and Big Tech companies are far from happy with the potential impact on the business of gatekeepers (especially Google).

In retaliation, Big Tech companies have launched their own strategies to escape the confines of the DMA. In particular, Google invested £5 million in advertising, social media posts and emails to manipulate officials in Brussels. The tech giant has also funded lobbying-related activities that were executed by trade associations which rely on Google for funding, according to the EU’s transparency register.

One of Google’s key arguments against the DMA is that the new regulations would cause greater harm to the smaller businesses that they aim to protect; by decreasing targeted adverts, this could lead to an increase in popup windows requesting consumer consent, which could result in a decrease in customer flow.

Dutch MEP Kim van Sparrentak has been a key proponent of this message, especially after she was invited to a Google-sponsored event focused on promoting the benefits of digital marketing for SMEs. Furthermore, she was the recipient of a letter signed by small businesses backed by the Connected Commerce Council (CCC) which stated: “please don’t make it harder for my business” – intriguingly, the CCC’s two biggest partners are none other than Amazon and Google.

Several other MEPs noted that their Twitter feeds were filled with clout and adverts from tech lobby groups that echoed Google’s sentiment towards the issue of banning targeted advertising, led by the Interactive Advertising Bureau (IAB) in Europe. EU officials noted that the ads were nearly unrecognisable, aside from the skewed data only referencing the IAB. Last week, Germany officially declared Google a “gatekeeper” and has begun to show stricter oversight over its services.

One of Google’s key concerns is the curbing of self-preferencing, which it heavily relies on to promote its own businesses, such as its travel and hospitality comparison service. If strict regulations ensue, Google could be forced to change the design of its search pages altogether, according to Thomas Hoppner from the law firm Hausfeld.

Pressure has continued to mount on the tech giant since it was forced to pay a €2.42 billion antitrust fine for promoting its own shopping services over others, which could account for its aggressive lobbying strategies. Thomas Vinje of FairSearch accurately states that Google’s DMA fears stem from the fact that its entire business model relies on “disadvantaging competitors and advantaging its own services in its search results”.

In 2021, Google was forced to apologise to EU commissioner Thierry Breton for plotting to thwart him by reshaping political narratives surrounding the Digital Services Act (DSA), which Breton was spearheading. Ironically, the DSA was created to curb the spreading of disinformation, as well as to tackle the circulation of illegal content and to increase ad transparency. If Google’s tactics have proven anything, it is that we need the DMA and further legal restrictions on tech giants to inhibit this rogue behaviour.

Circling back to Google’s home soil, the Democrats’ attempts to reduce the power of the DMA demonstrates a clear disjuncture between their agenda versus that of US lawmakers, who are keen to protect consumers and push antitrust measures at home. The passing of the American Innovation and Choice Online Act was another recent slap on the wrist that has made the likes of Google and Apple quiver.

The obscene amount of power concentrated within the hands of Silicon Valley’s tech giants is finally being clamped down on by officials within the EU and the US itself. Yet, as Big Tech attempts to strike back, it is difficult to determine whether the giants will be able to supersede it and continue to quash competition.


Sources


https://www.ft.com/content/c7a0d74c-9a10-4f5c-a381-2e60d3ea5a1f

https://www.marketwatch.com/story/big-tech-heads-for-a-year-of-thousands-of-tiny-tech-papercuts-but-what-antitrust-efforts-could-make-them-bleed-11640640776

https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en

https://www.ft.com/content/d6cb3541-beef-4335-a0d0-ce5d6585e53d

https://www.ft.com/content/8c7527bc-7ab4-41cd-ba94-3145208da9c3

https://www.cityam.com/an-awful-lot-to-play-for-google-lobbies-eu-for-a-softer-digital-markets-act-as-amendments-made/

https://www.ft.com/content/5528eab4-ac19-40c0-893a-9b86ccd091f6


https://techcrunch.com/2022/01/05/germany-fco-google-decision/


https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1784


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