Upcoming 'EU Digital Act' Impact... Big Tech Busy Preparing Countermeasures

Digital Services Act and Market Act to be Enforced in August-September
Google, Apple, Amazon Preparing Countermeasures
"Big Tech Shifts to a World of Strong Regulation"

As the European Union (EU) prepares to implement the Digital Services Act (DSA) and Digital Markets Act (DMA), global big tech companies such as Google and Apple are busily devising countermeasures. Since these laws were introduced after three years of preparation to strengthen the responsibility of large platforms for the spread of illegal content and to prevent abuse of market dominance, the regulatory intensity on big tech is expected to increase significantly, making companies nervous.

According to the Wall Street Journal (WSJ) on the 20th (local time), the EU will enforce the DSA on the 25th of this month and the DMA next month. These two laws were initiated by the EU in 2020, finalized last year, and will be fully applied starting this year.

Margrethe Vestager, Executive Vice President in charge of antitrust within the European Union (EU)
[Image source=AP News]

The DSA is a law that strengthens the responsibility of large platforms regarding the spread of illegal and harmful content. The DMA, which will be implemented subsequently, contains measures to limit the market power of large online platforms. These two laws are considered the most comprehensive regulations on tech companies since Europe enacted the General Data Protection Regulation in 2018. WSJ explained, "Hundreds of provisions are similar to various regulations imposed on the financial sector in the United States over 100 years ago."

Ahead of the law enforcement, companies are preparing countermeasures. Google is preparing a separate screen to be used on smartphone internet browsers. This measure considers the EU’s desire for a competitor to the Chrome browser, which is widely used in Europe. Apple is preparing a plan to allow iPhone applications (apps) to be installed outside of the App Store.

Amazon is building a new channel that can separately mark potentially illegal products or content and is preparing to provide additional information about third-party sellers. TikTok plans to offer users an option to receive videos based on regionally popular content rather than personalized recommendations based on the data of videos they have watched, aiming to reduce addiction.

WSJ predicted that these changes might even alter the way users scroll, search, or shop online. It is reported that thousands of personnel are involved in preparing responses to the EU’s digital law enforcement at big tech companies such as Google and Meta Platforms.

The reason big tech companies are accepting such extensive changes is that failure to comply with the laws could result not only in massive fines but also in having to withdraw their business from Europe altogether. Fines for violating online content rules can be up to 6% of total revenue, and repeated violations of digital competition rules can incur fines up to 20% of revenue. The EU also has the authority to forcibly dismantle companies that repeatedly violate the laws.

Martin Husovec, a professor at the London School of Economics, explained, "The most important change is that big tech companies are losing their monopoly on providing services and setting rules for users."

Brian Wieser, a technology analyst with an investment banking background, referred to the Glass-Steagall Act, which reformed banks and regulated speculation by separating commercial and investment banks in the United States in 1933, stating, "This is the Glass-Steagall moment for big tech companies. They are moving from an environment with virtually no regulation to a world of strong regulation."

The EU’s recent measures are attracting global attention. Europe has maintained pressure on IT companies for years, including the 2018 General Data Protection Regulation, solidifying its leadership as a regulatory authority. As such, these European rules are often adopted as global standards, increasing the likelihood of expanded regulations worldwide.

The EU aims to expand fairness and openness in the digital market through the enforcement of these two laws. This will allow startups to emerge more easily in the market and challenge the established large corporations. Alberto Bacchega, the EU director responsible for DMA enforcement, explained, "That is exactly what we want to achieve and it is a long-term project."

This content was produced with the assistance of AI translation services.