(CN) — Under new proposed European Union rules, tech giants like Facebook and Google could face massive fines if they repeatedly fail to take down content deemed dangerous and break fair competition practices.
The tough new draft legislation was unveiled Tuesday by the European Commission, the bloc’s executive arm, and was hailed as a landmark effort to impose a legal framework to the disorder of the digital world. With these proposals, the EU is threatening to levy fines of between 6% and 10% of a company’s global revenues for breaking the rules.
A core goal is to rein in the colossal powers of the big American tech companies like Google, Apple, Facebook and Amazon, whose practices are seen in Europe as stifling European competitors, disregarding the continent’s deeply held privacy concerns, operating as untrammeled profit engines and threatening democracy by allowing the spread of hate speech and disinformation. These companies are dominant in Europe just as they are around the globe.
The rules propose a set of criteria tech companies must follow to ensure content deemed harmful and dangerous – such as hate speech and disinformation – is quickly removed. The rules also envision placing restrictions on the data the biggest tech firms collect and forcing them to treat competitors more fairly.
This is the latest, and many say most aggressive, step the EU has taken in recent years to challenge U.S. tech companies, which are increasingly under pressure around the world and even in the United States for allegedly unfair practices stifling competition.
Over the past two months, the U.S. federal government and numerous U.S. states opened antitrust lawsuits against Google and Facebook. The Federal Trade Commission wants Facebook to sell Instagram and WhatsApp.
At a news briefing to unveil the rules in Brussels on Tuesday, Margrethe Vestager, a Danish politician and top EU official who’s led the bloc’s efforts to fight U.S. tech giants, said the EU is “part of a global conversation about how to balance things because the important thing here is with size comes responsibility.”
The proposed rules have a long way to go before they may be adopted. They will need to be approved by the European Parliament, the EU’s directly elected body, and the European Council, an EU policy-making institution made up of national leaders. During that process, the rules could undergo major revisions and languish entirely.
Vestager said the fastest the rules could be made into law would be a year and a half. Others, though, predict it could take much longer for such a broad set of groundbreaking proposals to be approved.
Still, many see the rules as a potential game changer.
“I think they will have the potential to change the internet,” said Tiemo Wolken, a German Social Democratic member of the European Parliament, on Deutsche Welle, a German broadcaster.
He said the legislation finally provides “clear rules” to force platforms to moderate content and protect internet users. He said the proposed huge fines could also “change the behavior of big platforms.”
He said the European Commission’s previous efforts to sue tech companies and levy fines for unfair competition practices have proven to take too long and yielded mixed results. By comparison, he had high hopes for this new legislative tactic.
The responses from the U.S. tech companies and business interests were largely negative, though Facebook said the EU was “on the right track to help preserve what is good about the internet.” Facebook is under immense pressure to do more to protect users’ data and remove content deemed dangerous on its social media platforms.
Google said in a statement that the proposals “appear to specifically target a handful of companies and make it harder to develop new products to support small businesses in Europe.”
Myron Brilliant, the head of international affairs at the U.S. Chamber of Commerce, said in a statement that the proposed rules “target American companies almost exclusively by imposing onerous new regulatory requirements backed by steep financial penalties.”
“It seems Europe is intent on punishing successful companies that have made deep investments in Europe’s economic growth and recovery,” he said. “Moreover, these measures will not improve Europe’s own competitiveness.”
Europeans see it very differently.
Thierry Breton, a former French finance minister and businessman serving as an EU commissioner who helped develop the rules, said the EU does not intend to break up big American tech companies but it will insist those companies respect European values and play by fair rules.
“We will never say this company or that company are too big,” he said at a news conference with Vestager. “We don’t say that here in Europe. We respect companies. But we say that the bigger they are the more obligations they may have to fulfill what is important to us.”
He said the EU must “act quickly” because smaller companies are being hurt by the unfair market conditions.
Under the rules, the biggest companies on the internet will have to abide by special rules because they will be deemed to be so-called “gatekeepers.” Companies meeting this definition have more than 45 million individuals and more than 10,000 businesses using their platforms a month.
“They are large players in terms of annual turnover, market capitalization and they are active in several member states,” Vestager said. “They are really operating as gatekeepers so that they are in between a large number of businesses and an even larger number of individual users.”
She added: “I think you can imagine how this combination of criteria can give gatekeepers an unfair advantage in a given service.”
She said complaints about the allegedly unfair practices of the biggest companies “keep coming through our door” and that the commission will continue to aggressively pursue challenges it has undertaken against Google, Amazon and Apple.
But she said new EU laws are needed to police the digital marketplace.
“This is to do the same thing we have been doing in banking, in telecoms, in energy,” she said. “To realize that antitrust will have to work with regulation so that we have a complete set of tools.”
The EU wants to restrict the use of data big tech companies gather from the businesses and people that use their platforms. Vestager said the rules force tech companies to set up “data silos” that separate data from “different business lines.”
“A gatekeeper gathers enormous amounts of data so they also gather enormous insights in the ups and downs of their competitor; they will know who buys what, when, at what price, how do they pay, they know if you hesitated or you went straight to buy what you wanted,” she said. “Gatekeepers shall no longer use the data they collect from all businesses that they host when competing against them.”
Also, big tech companies will need to allow competitors, such as startup tech companies, to use their platforms to reach potential clients. Another possibility is that the rules could force social media companies like Facebook make their social media platforms interoperable with other social media services.
Another innovation under these rules would force big tech companies to not favor their own services in search engines over those of competitors.
“So, the point here is to oblige the gatekeeper to adjust the search algorithm to make sure rival offers will receive the same level of provenance as their own offers would do,” she said.
In addition, all internet platforms, not just the biggest ones, would be required to remove content deemed to be harmful, illegal and dangerous.
“A safe digital space is one that protects users from illegal and harmful content while preserving the freedom of expression,” Vestager said. “Digital platforms will be required to swiftly remove illegal content, but in parallel to explain why to the user, why the content was removed and give him or her an option to complain about it.”
Tech companies would also be made to check the identities of people selling products on their platforms, a rule designed to ensure people aren’t selling illegal products online.
“On some of these platforms we had the feeling that some companies were operating with impunity,” Breton said. “‘Well, I can do whatever I like including selling products and not having to worry about where they were produced or under which conditions.’”
Still, for many digital privacy advocates in Europe the proposed rules, even though they could become potentially the toughest in the world, do not go far enough.
“The commission’s proposal is an important step but falls short of putting forward an ambitious plan to break free from the centralized platform economy that defines people’s online experiences today,” said Jan Penfrat, a senior policy advisor at European Digital Rights, a network of digital watchdog and advocacy groups, in a statement. “The result so far is a mixed bag of what seems like good intentions that met corporate and government lobby realities. Much more work will be needed to achieve systemic changes and put people in control of their life in the digital world.”
Courthouse News reporter Cain Burdeau is based in the European Union.