Is big tech finally being reined in?
You don’t need to be an economist to see that in recent decades, major tech companies like Google, Facebook, Amazon, and Apple have been more or less running the show. Now it looks like various government bodies are beginning to challenge these giants, but it could take some superhuman strength to take down this beanstalk.
When restrictions are imposed on the tech industry and corporations, they are most commonly in the areas of antitrust, data privacy, or child protection. The measures can lead to costly structural changes for large organizations.
While there have been some limits to the regulation of big tech in the US, there’s no reason those giants can’t be brought to book by other global jurisdictions. Just look at the way Apple is going to be forced to adopt USB-C chargers for its mobile devices from 2024, bringing it in line with the likes of Samsung and Huawei. This judgment comes from the European Parliament and looks to primarily affect Apple, although some predict a rise in sales for the company as users switch to the new USB-C devices.
Europe takes the lead in tech regulation
It looks like the largest global tech firms could be taken down a peg or two in the near future, but not necessarily by US regulators. Last month, Meta sold Giphy, due to a ruling from the UK’s Competition and Markets Authority (CMA), even though both companies are US-based.
The CMA regulates competition, and it said that Meta’s purchase of Giphy was harmful to competition in both social media and display advertising markets, as Meta was in a position to deny its competitors access to a leading GIF database. Giphy also had an advertising business which Meta closed after the purchase, removing a competitor in the display advertising market.
Although the ruling was made last year, it seems Meta underestimated the CMA and the lengths it would go to, but the British government organization has proven true to its word. The CMA is also looking at Microsoft’s acquisition of Activision and Amazon’s purchase of MGM.
The EU’s General Data Protection Regulation (GDPR) has been bringing companies with European customers to account since 2018, with some of the strictest rules and the heaviest penalties in the world. Many companies have already been hit by these hefty fines, but some suggest that it’s the largest firms that are better positioned to handle the expenses and the extra resources needed for meeting compliance.
In Spain, an antitrust regulator is looking into the possible malpractice in the tourism industry of Booking.com. Meanwhile, in Australia, the government passed a law to make Meta and Google pay local media companies for the content they host. This is the first law of its kind and has already resulted in the two tech giants paying vast sums to Australian media companies.
How big tech regulations look stateside
Things have been a little slower in the US, and the big plans to regulate tech firms have fallen flat for different reasons, including the pandemic, the war in Ukraine, and the economic downturn. Earlier this year, Senator Elizabeth Warren (D-MA) introduced the prohibiting Anticompetitive Mergers Act to Congress, but it hasn’t yet been passed. Keen on corporate reform, Warren had used the phrase ‘break up big tech’ when she ran for President in the 2020 Democratic primaries.
Last year President Biden signed a pro-competition executive order with a particular focus on big tech, and he also appointed a tech antitrust specialist as chair of the Federal Trade Commission (FTC). But the president was initially suspicious of EU regulations and may have been too slow to bring in antitrust measures.
Since the beginning of this year, the FTC has been trying to force Meta to sell Instagram and Whatsapp, and it’s rumored the Department of Justice (DOJ) is preparing a lawsuit against Alphabet, Google’s parent company, over its ad-tech company.
America may be catching up with Europe in corporate regulation, but the recent mid-term elections could potentially put the kibosh on new legislation, which may have trouble passing Congress since the House and Senate are controlled by opposing parties.
Regulations on the horizon
The DMA website explains that the law aims to prevent gatekeeper platforms from gaining unfair powers in the market. It will also ensure transparent data practices are maintained, and innovation and competitiveness are encouraged. The penalties for failing to meet compliance could be as high as 10% of global turnover, or 20% for repeat offenders.
The DSA is more focused on making improvements in advertising, disinformation, and illegal content.
Big tech has some time to get ready before the changes are in full effect, but this may take some work. And the new regulations are going to make a big difference.
EU official Gerard de Graaf said that “If you have an iPhone, you should be able to download apps not just from the App Store but from other app stores or from the internet.” This is just one of the ways in which the new laws could upend the tech market. The DSA could be about to force companies like TikTok to be less secretive about their data.
Right now, the EU seems dead set on regulating the tech industry, but how this plays out over the next few years remains to be seen.