EU to unveil landmark legislation to tackle market power of Big Tech

The EU is poised to unveil a landmark law designed to rein in the market power of Big Tech this week, after a deal was struck on crucial details such as the size of companies targeted by the long-anticipated legislation.

The Digital Markets Act could be revealed as early as Thursday, following the European Commission, European Parliament and member states agreeing many of the final aspects of the law, despite intense lobbying efforts from the likes of Google and other large technology groups.

The legislation is now expected to target companies that have a market capitalisation of at least €75bn and run one core online “platform” service such as a social network or web browser, according to two people directly involved in the deal.

To qualify as a “gatekeeper” — the powerful internet groups that are the focus of the new law — a company will also have to have at least 45,000 active users, the same people said.

Google, Amazon, Facebook, Apple and Microsoft all meet this standard, but it is likely to also include far more groups than previously thought such as accommodations site Booking.com and ecommerce group Alibaba.

Those involved in the deal said the final details could still change and the timing of an expected announcement could yet slip, as negotiators continue to hammer out further details. But the framework agreed in recent days represents a crucial breakthrough for the bloc, as it plans the biggest overhaul of the laws governing the world’s biggest technology companies in over two decades.

The act will set out for the first time the rules of how large online platforms must compete in the EU’s market. Among the details agreed by EU bodies is a measure that will force large tech companies to offer consumers the option to choose an email application and a search engine when buying a new smartphone.

Users will also have the legal right to uninstall applications. At the moment, companies such as Apple and Google preload many of their services on to devices without giving consumers a prior choice. People will also be able to use online services with greater restrictions to the way these companies handle their data.

Another measure agreed between legislators in Brussels will force messaging services to interact with competing services from smaller rivals. This could mean that a user of Meta-owned WhatsApp should be able to send messages directly to a user of an entirely different messaging service, breaking the “closed” model that many tech groups favour.

EU regulators have argued that the new rules will be transformative. Andreas Schwab, a German MEP and a key powerbroker in Brussels, said the Digital Markets Act had the potential to allow “competitors to enter a market that has been dominated by a few companies and it limits the possibility for existing companies to close markets”.

But critics suggest that the legislation will throttle innovation. Nick Clegg, president of global affairs for Facebook’s parent company Meta, has warned it “risks fossilising how products work and preventing the constant iteration and experimentation that drives technological progress”.

Senior EU officials have disregarded such criticisms and are celebrating the new rules, which are expected to be in place at the start of 2023.

Thierry Breton, the EU’s internal market commissioner, told the Financial Times: “We have tried in the past to address gatekeeper issues through competition cases. But these cases can take years and in the meantime the harm to SMEs and innovators is done. We needed an innovative response. And we [have] managed, against all odds.”