US tech giants targeted as EU bares its teeth with new digital competition laws

Draft EU rules to be unveiled Tuesday would see tech giants face huge fines or banned from the market for breaches, according to sources, posing a major challenge to the likes of Google and Facebook.

The companies that make up the GAFA quartet. REUTERS

The EU Commission is gearing up to present its long-trailed Digital Services Act and its accompanying Digital Markets Act to lay out strict conditions for internet giants to do business in the 27 countries.

EU sources said Monday the landmark legislation would see tech behemoths facing fines of up to 10 percent of their revenues for breaking some of the most serious competition rules.

It could also see some of the world's biggest firms banned from the EU market "in the event of serious and repeated breaches of law which endanger the security of European citizens", the sources said. 

Internet should not benefit a handful of companies only 🚧

Our 🇪🇺 citizens, entrepreneurs and SMEs expect #MoreNotLess fairness.

With the #DigitalServicesAct, major platforms will have increased #responsibility.

I discussed this with Google CEO @sundarpichai ⤵️ pic.twitter.com/grvvg5DJps

— Thierry Breton (@ThierryBreton) November 13, 2020

The proposals -- which could revolutionise how Big Tech does business -- aim to tackle hate speech and disinformation online and curb the might of leading firms to dominate markets.

The largest companies would be designated as internet "gatekeepers" under the legislation, subject to specific regulations to limit their power over the market.

Some ten firms -- including Google, Apple, Facebook and Amazon, the so-called GAFA -- will be slapped with the designation.

The draft laws will go through a long and complex ratification process, with the EU's member states, the European Parliament, and company lobbyists and trade associations influencing the final law.

Illegal content                  

The details of the proposals have until now been carefully guarded by the European Commission, the EU's executive arm, even though a few have leaked.

The main intention of the new rules is to update legislation that dates back to 2004, when many of today's internet giants either did not exist or were in their infancy.

The Digital Services Act is being touted as a way to give the commission sharper teeth in pursuing social media platforms when they allow illegal content online.

Under the Digital Markets Act, the EU is seeking to give Brussels new powers to enforce competition laws more quickly and push for greater transparency in their algorithms and use of personal data.

Tech giants will need to inform the EU ahead of any planned mergers or acquisitions under the regulations, Breton said.

There has been growing concern among European and US regulators that the big tech firms have used purchases as a way to nip potential rivals in the bud.