New EU rules regulating US tech giants likely to set global standard

The Digital Markets Act (DMA) sets out a list of dos and don'ts targeting each tech giant's core business practices

Landmark EU rules targeting Alphabet unit Google, Amazon, Apple, Meta, and Microsoft are likely to set a global benchmark and may even force the tech giants to be more innovative, lawyers and experts said.

Europe’s antitrust chief Margrethe Vestager has won backing from European Union members and EU lawmakers for her proposal, the Digital Markets Act (DMA), to rein in the powers of the tech giants via legislation for the first time, rather than lengthy antitrust probe.

The DMA sets out a list of dos and don'ts targeting each tech giant's core business practices. “DMA is here to stay and will be quickly mirrored in a number of countries. The flexibility that big tech had will be constrained, as the regulatory ‘straitjacket’ will get tighter globally,” said Ioannis Kokkoris, competition law professor at Queen Mary University in London.

Vestager’s switch to legislation came amid frustration over slow-moving antitrust investigations that deliver remedies criticised by rivals as inadequate, with Google often cited as an example despite being hit with more than 8 billion ($8.8 billion) in fines.

But the new rules also have the potential to spur more innovation contrary to the tech giants’ worries, said Nicolas Petit, professor of competition law at the European University Institute in Florence. It might even boost some companies’ business models, he said. “I think the DMA indirectly places a premium on business models based on subscriptions or device level monetisation. We might see more (increased) prices, and vertical integration into hardware in the future.”  

Still, enforcing the DMA will require a bigger team than the small group planned by the European Commission, said Thomas Vinje, a partner at law firm Clifford Chance in Brussels who has advised rivals in cases against Microsoft, Google and Apple.

... but data pact with US may avert blackout

The European Union and the US broke the deadlock on a new data-transfer pact, potentially avoiding a doomsday scenario for tech giants such as Meta Platforms Inc. and thousands of other firms that rely on free flows of information across the Atlantic.

The EU and the US said on Friday they agreed in principle to a new accord after a previous arrangement was struck down due to concerns over the power of American agencies to snoop on the information without adequate privacy safeguards.

This new pact will “enable predictable and trustworthy data flows, balancing security, the right to privacy and data protection,” European Commission President Ursula von der Leyen said. While negotiators will still need to work out the finer details, the result could signal an end to the uncertainty over data flows that led Facebook owner Meta to warn of a potential withdrawal from the EU if the legal vacuum persisted.