US tech firms face massive fines as EU seeks to tame giants

BRUSSELS • US technology companies including Amazon, Apple, Facebook and Google face fines of up to 10 per cent of their annual turnover and could even be forced to break up under draft EU rules aimed at curbing their powers.

The rules unveiled on Tuesday are the most serious attempt by the 27-country bloc to tame tech companies that control troves of data and online platforms relied on by thousands of companies and millions of Europeans for their work and social interactions.

They also mark the European Commission's frustration with its anti-trust cases against the tech giants, notably Alphabet's Google, which critics say did not address the problem.

Regulatory scrutiny of tech giants and their power has been growing worldwide, following a string of scandals over privacy and misinformation. European Competition commissioner Margrethe Vestager and EU Internal Market commissioner Thierry Breton both see the rules as a bid to prevent the emergence of anti-competitive dominant companies.

One set of regulations, the Digital Markets Act (DMA), calls for fines up to 10 per cent of annual global turnover for so-called online gatekeepers that do not comply with the new rules as well as a break-up order as a last resort.

It also sets out a list of dos and don'ts for gatekeepers, defined as firms with an entrenched position, a significant impact on the EU market and with a core platform service which is an important gateway to users.

These companies will also be required to report merger bids to the authorities, a move aimed at preventing acquisitions that kill off rival businesses.

The second set of regulations, the Digital Services Act, also targets very large online platforms, such as those with more than 45 million users. They will be required to do more to tackle illegal content, misuses of their platforms that infringe fundamental rights and intentional manipulation of platforms to influence elections and public health, among other requirements.

The companies will also have to show details of political advertising on their platforms and the parameters used by their algorithms to suggest and rank information.

The draft rules need to be approved by EU countries and their lawmakers, some of which have pushed for tougher laws, while others are concerned about regulatory over-reach and the impact on innovation. Tech companies, which have called for proportionate and balanced laws, are expected to take advantage of this split to lobby for weaker rules, with the final draft expected in the coming months or even years.

Differences between the tech giants could dilute the opposition.

Facebook, for one, has urged the EU to rein in Apple. "We hope the DMA will also set boundaries for Apple. Apple controls an entire ecosystem from device to app store and apps, and uses this power to harm developers and consumers, as well as large platforms like Facebook," the US social network said in a statement.

In another development, Australia's consumer watchdog yesterday launched legal action against Facebook, alleging the social media giant "misled" thousands of Australians by collecting user data from a free VPN service advertised as private.

The platform could face a fine if found guilty of deceiving users, as Australia takes an increasingly assertive stance towards powerful US tech titans. The watchdog had previously helped draft a law that threatens Facebook and Google with millions of dollars in fines unless they agree to pay media outlets when their platforms host news content.

REUTERS