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The EU unveils new legislature preventing big tech companies from snuffling out competition

The EU is not backing down in its effort to maintain competition in the tech industry. It has released its most significant legislative package ever, the Digital Markets Act or DMA.

DMA is supposed to prevent the larger and most dominant companies from stifling competition from smaller firms, including startups. In reality, these dominant tech companies are US-based.

The EU has previously addressed anti-competition on a case-by-case basis, but the DMA attempts to introduce reforms that address the core of the issue.

For example, the DMA is mandating interoperability within messaging apps. This compels more giant platforms like Meta-owned Whatsapp and Messenger and Apple’s iMessage to allow integration with smaller messaging platforms if they so request. The plan is to enable users to freely choose the platform they want without worrying about which platform the recipient uses.

The same sentiment applies to choosing browsers, virtual assistants, and search engines.

The DMA classifies some companies as gatekeepers, which, according to the EU’s definition, the company has a market capitalization of more than €75 billion, at least 45 million monthly users, and a social network. This means Google, Microsoft, Meta, Amazon, and Apple are in the category. However, far smaller companies like Booking.com are also targeted.

Failure to abide by the rules attracts steep financial penalties. The EU “can impose fines of up to 10 percent of its total worldwide turnover in the preceding financial year, and 20 percent in case of repeated infringements. In case of systematic infringements, the Commission may ban them from acquiring other companies for a certain time.”

Speaking to The Verge, EU’s Commissioner for Competition, Margrethe Vestager, said DMA is going to make tech open and contestable. “So it depends on your ideas, your work ethics, your ability to attract capital, whether you’ll be successful with your customers or not. And unfortunately, because of the systemic nature of behavior, that’s not necessarily the case today.”

Meanwhile, the DMA has not passed yet as it needs to be finalized, after which the Parliament and Council would approve it. The new rules may come into effect in October, although the implementation of the full legislature would be spread across several years.

Some of the other areas touched on by the DMA include:

  • Interoperability. Gatekeepers should allow their platforms to work with similar services from smaller third-parties. Exactly how this will be interpreted isn’t yet clear, but it could mean letting users on large messaging platforms like WhatsApp contact users on other, platforms.
  • The right to uninstall. Consumers are to be given more choice over software and services, particularly in mobile operating systems like iOS and Android. They should be able to uninstall any preloaded software, and be given a choice when setting up a new device what service they want to use for applications like email and web browsing.
  • Data access. Businesses should be able to access data they generate for larger platforms. This would mean, for example, letting companies who sell goods on platforms like Amazon access Amazon’s analytics about their performance.
  • Advertising transparency. If a company buys adverts on Facebook, for example, they should be given the tools to independently verify the reach of their ads. Companies will also be barred from “combining personal data for targeted advertising” without explicit consent.
  • An end to self-preferencing. Companies can’t use their platforms to put their products first. This means Google, for example, can’t put its shopping service at the top of its search results unless there is some sort of competitive tender for that spot.
  • App store requirements. The Commission says platform owners can no longer require app developers to “use certain services (e.g. payment systems or identity providers) in order to be listed in app stores.”

Written by HackerVibes

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