Brussels plan to rein in Big Tech takes shape

The EU is preparing for its biggest-ever effort to regulate the tech industry — drawing up extensive rules to govern what tech companies can and cannot do.

Three European Commission internal documents, seen by POLITICO, indicate that Brussels is drawing up a wide range of legislative tools to prohibit what it sees as anti-competitive behavior and oblige companies to do more to protect their users against illegal content and activities.

“This crisis has shown the role and the systemic character of certain platforms that often behave as if they were too big to care about legitimate concerns about their roles: too big to care,” Internal Market Commissioner Thierry Breton told the European Parliament this week, an apparent reference to “too big to fail,” a criticism leveled at powerful banks after the 2008 financial crisis.

The Commission is expected to present its proposals, known collectively as the Digital Services Act (DSA), in December. The legislative package will include content moderation requirements applying to a wide range of online platforms, as well as so-called ex ante rules for the largest tech companies.

The plans come as Big Tech companies are under intense scrutiny on both sides of the Atlantic.

Apple and Amazon are currently under investigation by Brussels competition authorities, while Google has already been slapped with three antitrust fines, including for favoring its own services over those of rivals and making unfair use of its Android operating system to maintain its dominance in online search. (The company has appealed.)

In Washington, the House of Representatives is expected to release Monday a long-awaited antitrust report on competition in the tech sector, after the CEOs of Apple, Amazon, Google and Facebook were grilled by skeptical U.S. lawmakers over the summer.

Some of the Commissions draft provisions include preventing those companies from favoring their own services on their platforms and from exclusively pre-installing their apps on operating systems, according to a draft list of banned behavior.

Gatekeepers rules

As part of the package, the Commission is drafting ex-ante rules to regulate the biggest tech companies. Instead of waiting for competition complaints and cases to ask for remedies, the future legislation would instead impose obligations on companies on the basis of being “gatekeepers,” meaning they are indispensable for other companies to reach consumers and get market access online.

While the rules are expected to target Google, Facebook, Apple and Amazon, a draft impact assessment showed that cloud giants such as Microsoft could also fall under the scope.

“Due to the winner-take-all dynamics of the platform economy, big online platforms have grown and gained gatekeeper power,” reads the Commissions impact assessment on the future rules. “Gatekeepers raise important concerns since they have the ability to, and do engage in harmful trading practices. These practices affect both their business users and competitors.”

For example, Apple is facing complaints from Epic Games, which runs the popular videogame Fortnite, and Swedish music-streaming platform Spotify over its App Stores policies. Epic complained about the stores payment system, and Spotify accuses Apple of favoring its own Apple Music, which it is in direct competition with.

In April, the Wall Street Journal reported that Amazon, which both hosts sellers on its online marketplace and competes with them, used rivals data to enhance its own wares. Amazon denies the charge, saying that doing so goes against its own rules.

The Commission hasnt yet decided on the best option to deal with gatekeeper platforms, but it is considering a blacklist of banned behavior and a whitelist of obligations in four “key services”: app stores, marketplaces and social networks, which all come under “online intermediation services;” online search engines; operating systems; and cloud services.

Besides the likely bans on self-preferencing and exclusive pre-installation of their own apps on operating systems such as Apples iOS or Android, gatekeeper companies could be prevented from using data collected on their platforms for their own commercial activities unless they also share them with their business users, and have stricter obligations to notify authorities of future mergers and acquisitions.

The Commission also refers to a “gray list,” which lists behaviors regulators would be empowered to prohibit. It includes a ban on restricting the use of business users data and a ban on proposing different prices for similar services if one of them is operated by the gatekeeper, among others.

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