New rules in the EU: Shackles for Apple, Google & Co.

The European Union does not have much time left if it is to effectively limit the dominance of the five large American Internet companies. Representatives of the EU Commission, European Parliament and member states agreed on this even before last Friday. Google, Amazon, Facebook, Apple and Microsoft already control access to the Internet too much like “bouncers” and restrict competition. Nevertheless, the two competition proceedings that the Commission and the Federal Cartel Office have now initiated or expanded against Facebook and Google acted like a final appeal: They show that the EU is "almost too late" with its ideas for regulating the Internet giants, as the CDU MEP Andreas Schwab says.

Schwab is not just anyone. As rapporteur in the European Parliament, he is in charge of one of the two proposals intended to break the supremacy of Internet companies: the “Law for Digital Markets”, or DMA for short. The Commission wants to ban certain business practices from all providers of platforms that, like bouncers, control access to individual markets. To this end, it has created a “black list” that states, for example, that a search engine provider may not prefer to present its own offers or that a smartphone manufacturer may not tie app providers to its app store.

The Commission drew its inspiration for the list from the completed and ongoing competition proceedings against the Internet companies.

The list, which can be continuously adapted, should allow you to take quick action against competition violations.

According to their analysis, that has been the problem so far: that competitive procedures take too long.

Focus on the big five

So now it's up to Parliament. It has to approve the Commission's DMA proposal of December 2020 as well as the Council of Ministers for it to come into force. The deliberations at ministerial level are expected to begin in the second half of the year. Schwab, on the other hand, submitted his proposed changes at the beginning of last week. He suggests minor changes to the blacklist. He wants to explicitly forbid platforms to forbid their users to offer or advertise their offers on other platforms.

He wants to insert a clause that prohibits the corporations not only from the almost 20 business practices on the blacklist, but also from all other practices that have the same result. Above all, however, he wants to align the DMA clearly with the five major Internet companies. The thresholds from which a group should be considered a doorman should be at an annual turnover of 10 billion euros. In addition, they should have to operate more than one platform - just as Google not only operates a platform for search queries, but various others such as Google Shopping or Gmail. The commission wanted to pull the threshold with a turnover of 6.5 billion euros and a platform.

In fact, the DMA only applies to the five great Americans.

Companies from the EU such as Booking or Spotify are eliminated.

Schwab argues that control becomes too complex when you involve more companies.

“We don't have to involve more companies just to be nice to the Americans.” The Commission could also classify a company as a doorman regardless of the thresholds.

It is doubtful whether he will get away with this line in parliament.

Prevent "killer purchases"

MEP Tiemo Wölken, who oversees the DMA for the Social Democrats, accuses Schwab of “pulling his teeth” on the proposal. If the EU wants to prevent a company from becoming too powerful, it shouldn't wait until it already dominates several platforms. Wölken also calls for a lever to prevent “killer purchases” - as recently Germany, France and the Netherlands did in a position paper - that is, when an internet company takes over an aspiring start-up so that no competitor can grow up. One example of this is Facebook's takeover of Instagram. Schwab only stipulates that corporations must inform the Commission and the national authorities about such takeovers.

Work on the Commission's second proposal to contain Internet companies, the “Digital Services Act” (DSA), is also progressing. The DSA is intended to oblige Internet companies to remove illegal content - from child pornography to terrorist propaganda - quickly and effectively. Corporations should monitor whether their platform is being misused to spread disinformation. They should create more transparency in their recommendation algorithms, i.e. reveal why they show their users certain videos or other content. This is to prevent them from specifically recommending radical or incorrect content because users “click” it and the platform can then generate higher advertising revenues. The user should also be able to deactivate the recommendation algorithms.

The MP responsible for the DSA, the Danish Social Democrat Christel Schaldemose, has now also submitted her proposed changes. She wants to tighten the proposal. Above all, it is about rules for personalized advertising. This should only be allowed if users agree in advance. In addition, the rules should not only apply to large platforms, but to everyone who distributes advertising on the Internet.

For the Green Party, Alexandra Geese, this does not go far enough. She wants the EU to consistently say goodbye to "spying advertising". At the end of June, MEPs want to discuss both reports for the first time. The vote will take place in autumn. It is uncertain whether the EU can stick to its ambitious roadmap of passing both laws in early 2022. After all, negotiations with the states on a common position only follow then, and this can take several months.