EU To Propose ‘Two-Tier’ Rules For Tech Giants

Upcoming EU legislative proposals will reportedly aim to put into place a two-tier system of regulation that would reserve particularly strict rules for tech giants, as the bloc looks to bring in a major overhaul of its digital regulatory environment.

The UK competition authority is similarly expected to advise the use of tailored regulations for the largest tech companies.

An executive summary of the upcoming Digital Services Act states that the European Commission’s preferred option is to use “asymmetric measures”, with greater scrutiny and tougher penalties for the largest firms, the Financial Times reported.

The leaked document posits “stronger obligations” and “EU governance with reinforced oversight and enforcement” for the largest platforms.

‘Asymmetric rules’

“Asymmetric rules will ensure that smaller emerging competitors are boosted, helping competitiveness, innovation and investment in digital services, while targeting specific harms emerging from large platforms,” the document reportedly states.

The document does not give specifics on how the scheme would work or how companies would be singled out for tougher regulations.

The proposed Digital Markets Act is also expected to define “gatekeeper platforms” that could be designated based on the number of EU countries they trade in, revenue size or user base.

The Digital Services Act summary states that individual member states’ fragmented efforts to regulate digital companies has given large companies a “competitive advantage”.

European Commission president Ursula von der Leyen also expressed similar views at the virtual Web Summit last week, saying the EU wants to move toward “hard-and-fast digital rules” that apply across the bloc.

Digital strategy

The upcoming draft legislation has been delayed twice but is currently expected to be announced on Tuesday 15 December.

The DSA and DMA are part of a broader EU digital strategy, announced in February, that aims to improve fairness and competitiveness in the way digital services operate in Europe.

The Commission said in a statement that the legislation is intended to create a “level playing field to allow innovative digital businesses to grow within the single market and compete globally”.

Large tech companies are expected to push back strongly against the proposals, with a leaked Google document outlining a 60-day strategy intended to remove “unreasonable constraints” to Google’s business and to “reset the narrative” around the proposed legislation.

Google later apologised for the leaked strategy, saying it was “not the way we operate”.

UK approach

The UK last month announced its own plans to create a digital regulator in order to constrain the market power of tech giants such as Amazon, Facebook and Google.

The Digital Markets Unit of the Competition and Markets Authority (CMA), intended to “oversee a pro-competition regime for platforms including those funded by digital advertising”, is to begin operating in April 2021.

Ahead of the shift, the CMA is expected to publish policy recommendations in the coming weeks that will recommend customised regulatory regimes for companies with dominant market positions.

The agency is expected to recommend that companies with “strategic market status” adhere to rules governing their own markets as well as “adjacent markets”, the FT reported.