European Parliament Passes Landmark Tech Regulations

Landmark rules regulating the biggest tech companies have been approved by the European Parliament, a major step toward the rules coming into effect early next year.

The final vote on Tuesday followed deals reached between Parliament and the European Council on the Digital Services Act (DSA) and Digital Markets Act (DMA) in April and March.

The DSA aims to make the biggest platforms more accountable for the information they present online, while the DMA sets obligations for large platforms acting as “gatekeepers” on the digital market to prevent unfair business practices.

Steep fines

The rules target companies such as Apple, Amazon, Facebook parent Meta and Google.

Companies face fines of up to 10 percent of annual global turnover for DMA violations and 6 percent for contravening the DSA.

“With the legislative package, the European Parliament has ushered in a new era of tech regulation,” said German MEP Andreas Schwab, one of the laws’ key backers.

The DMA passed with 588 votes in favour and only 11 against with 31 abstentions, and the DSA with 539 votes in favour, 54 against and 30 abstentions, signalling strong backing for more regualtion.

Lobbying

Both require final approval by the EU’s 27 member states, which is considered a formality.

“The digital world “has developed a bit like a western movie, there were no real rules of the game, but now there is a new sheriff in town”, said Danish MEP Christel Schaldemose.

Tech companies had lobbied vigorously against the rules, with Apple warning last year they would open a “Pandora’s box”.

In November 2020 Google chief executive Sundar Pichai apologised to the European Commissioner in charge of the internal market, Thierry Breton, over leaked internal documents that detailed a strategy intended to remove “unreasonable constraints” to Google’s business and to “reset the narrative” around the proposed legislation.

Enforcement concerns

The document set a specific objective to “increase pushback” on Breton to help weaken support for the legislation. Pichai said at the time such tactics were “not the way we operate”.

Campaign groups welcomed the vote, but cautioned that the regulations will require significant resources to enforce.

“The Digital Services Act marks the end of the platforms’ vast liability exemptions and their seeming impunity,” wrote former European Commission official Georg Riekeles in an opinion piece in The Guardian ahead of the vote.

“It will impose more transparency on the platforms’ content moderation and set rules on so-called dark patterns, design features that can trick users into doing things they didn’t mean to.

‘First pass’

“But it’s still only a first pass at how to deal with the many complex uses of artificial intelligence and the platforms’ recommender systems that determine not only our commercial choices but the information we get and how we see the world.”

He said that the current regulatory environment dates back to the e-Commerce Directive of 2000, which followed the US’ lead in recognising online intermediaries as “neutral” content distributors and gave them immunity from liability for the information they hosted.

He argued that because of the prominent role tech companies play in society and politics, regulation needs to be not only about competition but also “a struggle against the tech sector’s capacity to influence public institutions, civil society and policy discourse, often in opaque ways”.