Saturday, September 23, 2023

Big Tech faces hefty fines, even disruption, under new content and Europe’s antitrust rules

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Big Tech lobbyists have their work cut out for them in Europe – and not just in the European Union.

On Tuesday, the European Commission proposed long-awaited legislation that could see tech giants such as Facebook and Amazon pay billions of euros in fines if they don’t stop the dissemination of illegal content – such as hate speech and advertisements for counterfeit products – on their platforms. This law will be called the Digital Services Act, or DSA.

The DSA will be accompanied by yet another proposal, the Digital Markets Law, which could heavily fines or even potentially shatter the biggest platform operators that do not treat business users and consumers fairly. Basically, the DMA would try to stop the abuse before it happens, rather than just punishing companies after the fact.

“Many online platforms have come to play a central role in the life of our citizens and businesses, even of our society and of democracy in general,” said Thierry Breton, Internal Market Commissioner, in a statement. “With today’s proposals, we are organizing our digital space for the next decades.”

Also on Tuesday, the UK government – whose country is no longer a member of the EU – announced upcoming rules on “online harm” that once again threaten companies with multibillion pounds of fines, if they do not clean up their platforms of illegal content, like children. sexual abuse material and terrorist material. This would apply to everyone, from social networks and search engines to mainstream cloud storage sites, and even video games that allow online interaction.

“Today Britain is setting the global standard for online safety with the most comprehensive approach to online regulation to date,” said UK Culture Secretary Oliver Dowden in A declaration. “We are entering a new era of responsibility for technology to protect children and vulnerable users, restore confidence in this industry, and enshrine guarantees for freedom of expression in law.”

The UK’s new rules, which will be set out in an online safety bill next year, would allow fines of up to 10% of global annual revenue, as well as the potential blocking of non-compliant services. The EU DSA would allow fines of up to 6% of global annual income.

However, the EU’s DMA proposal would be more impactful.

The DMA, which would allow fines of up to 10% of global turnover, with the possibility of additional fines, will only apply to the largest “gatekeepers” providing a link between businesses and consumers – l The aim is to protect these two groups against unfair terms.

These gatekeepers could be search engines, messaging services, social media services, and even owners of operating systems.

Great Britain ad a few weeks ago, he will set up a new technology-focused antitrust watchdog within the current Competition and Markets Authority, along with Facebook and Google explicitly in its sights.

By mid-morning in New York, Alphabet’s shares of Amazon, Facebook and Google were down, underperforming the Nasdaq.

Liability protection

The EU’s digital services law could mark a new era in European technology regulation, as it would update the liability protections that have been in place since 2000 – a time when Google and Amazon were still extremely young and Facebook didn’t even exist.

These protections, encapsulated in the E-Commerce Directive, say that “intermediary service providers” are not responsible for illegal content that their users post, as long as they promptly remove it once someone reports its nature. illegal. The directive also states that EU countries cannot force these intermediaries – known today as platform operators – to proactively monitor everything that happens on their platforms.

As proposed by the Commission, the DSA would leave these protections intact, but it would give Big Tech companies more responsibility: they would have to publish annual risk assessments regarding their fight against illegal content and the spread of disinformation, and they will be audited. to make sure they are telling the truth.

“We are relieved to see that surveillance and censorship is still not a political option,” said Christoph Schmon, director of international policy for the Electronic Frontier Foundation, the world’s largest digital rights organization.

The DSA proposal would effectively introduce a European counterpart to the “Good Samaritan” protections that platform operators enjoy in the United States under section 230 of the Communications Decency Act – this rule means that platform operators cannot not be punished for trying to keep their platforms clean.

Ironically, in the United States, conservative lawmakers are being pushed to remove this rule because they believe right-wing views are being unfairly censored by Facebook and Twitter.

When it comes to ecommerce platforms – here you are, Amazon – businesses will need to monitor the merchants who use their platforms more closely, to keep customers safe.

If they break the rules, they could face fines of up to 6% of global annual earnings – a similar approach to the 4% maximum fines introduced under the General Data Protection Regulation, although potentially more severe. However, unlike the GDPR, it would not be a universal law; the heaviest obligations would only apply to platforms with more than 45 million users in the EU. The same goes for the law on digital markets.

This is only the start of the road – the Commission’s proposals need to be scrutinized and amended by the European Parliament and Member States, which means that it will take years for these rules to finally emerge – but the big question is that of the application.

GDPR fines can be steep in practice, but it is up to national authorities to enforce the law. Most of the European bases of big tech companies are in Ireland, and Ireland’s privacy regulator has been reluctant to issue major fines so far.

Indeed, on Tuesday, two and a half years after the entry into force of the GDPR, the Irish Data Protection Commission issued its first fine in a case where it has coordinated with its other EU counterparts, such as the GDPR provides for this for Big Tech businesses. The result? A fine over € 450,000 ($ 546,500) for Twitter, following a data breach.

“There will be a lot of responsibilities with national states, and the GDPR is not a good example in this regard,” said Aline Blankertz, project director at Stiftung Neue Verantwortung, a leading German think tank.

Digital markets

The law on digital markets would prevent ‘gatekeepers’, for example from using the data of their business users to compete with them – something the European Commission already has instructed Amazon to do.

Controllers will also have to “allow their business users to promote their offerings and enter into contracts with their customers outside the controller’s platform,” the Commission said on Tuesday, adding that these business users will also have to have access to their own data.

In some cases, platform operators will need to allow third parties to interact with their services.

The maximum fine of 10% of revenues for infractions will be accompanied by “periodic fines” of 5% of global revenues, if companies continue to misbehave. And if that doesn’t stop them, the Commission could force the dissolution of the company.

This time the Commission itself would apply the law; it would not be left to individual Member States.

The Computer and Communications Industry Association (CCIA) – a major trade association that counts Facebook, Google and Amazon among its members – has responded cautiously to the Commission’s proposals, saying it welcomes the Goals.

“We look forward to working with EU policymakers to help ensure that the proposals meet the stated goals so that Europeans continue to reap the full benefits of digital products and services,” said Christian Borggreen, Head of the CCIA Europe in a press release.

Meanwhile, the European Consumers Organization (BEUC) said the plans were not ambitious enough and the European Parliament and Council should toughen them up.

“Antitrust investigations have shown how the access control practices of digital players harm competition and thus limit consumer choice,” said Monique Goyens, director of BEUC. “But competition investigations can be too slow to avoid irreparable damage to the market. It is the right decision to ban certain practices in advance instead of picking up the pieces afterwards.

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