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The EU is preparing to tighten the rules for technology companies and services
The European Commission has completed the preparation of new regulations that will become the basis for regulating the activities of large technology companies and online platforms. Violation of these laws after their entry into force will result in huge fines, and in case of systematic inconsistency, the measures can be tightened, up to the structural division of the business of tech giants.
The European Commission, the highest executive body of the EU, is ready to present two bills. The Digital Markets Act will tackle unfair competition in the tech segment, while the Digital Services Act will force tech giants to take more responsibility for transparency in online advertising and countering illegal content. Once the European Commission has formally presented the bills, they must be approved by the European Parliament and the Council of Ministers, so it is difficult to say when the new regulation may come into force.
Note that violation of new laws will be accompanied by huge fines. Large tech companies that deliberately violate competition rules in the EU market will be subject to fines that can amount to up to 10% of revenue. Companies that do not provide sufficient control of their own online platforms will be fined up to 6% of revenue.
It is also important that the Law on Digital Markets allows for more severe penalties for violation of the rules. Tech companies that face fines more than three times in five years will be considered repeat offenders, after which steps can be taken against them to structurally unbundle their businesses. If the research of a technology company reveals systematic anti-competitive behavior that contributes to strengthening market position, the EU may impose “any behavioral or structural sanctions proportionate to the violation and necessary to ensure compliance with the law.”.
It is worth noting that the new rules, if adopted as they are, will be one of the most stringent restrictions applied to tech giants around the world.