European Union vs. Tech Giants: Fight against Monopoly and Privacy
The ongoing battle between the European Union and tech giants such as Apple, Google, Meta, and Microsoft has been a major sensation in the tech community.
The European Commission (the primary part of the European Union) ruled that Apple must pay the Government of Ireland 14 billion euros. Between 2003 and 2014, Ireland provided Apple with favorable tax treatment through two Apple subsidiaries, Apple Sales International (ASI) and Apple Operations Europe (AOE). Ireland reduced Apple’s tax payment from a measly one percent of its profit in 2003 to a drastically reduced 0.05 percent in 2014.
This caught the attention of the European Commission, which began a preliminary investigation into Apple’s tax practice in Ireland. The European Commission concluded its investigation in 2016 and ordered Apple to pay the Irish government 14.5 billion euros, representing the full amount of taxes owed. Both Apple and Ireland opposed this ruling and took the case to the EU General Court. The EU General Court delivers a ruling in favor of Apple and Ireland. In 2020, the European Commission took this case to the European Court of Justice (ECJ), which is the highest authority in the EU. The ECJ overturned the judgment and ordered Apple to pay taxes to the Irish government.
For instance, the European Commission has fined Meta 1.2 billion euros for transferring user data to the U.S., a violation of European laws. Meanwhile, Microsoft is facing new EU antitrust allegations over their product TEAMS, which bundles their other products together. This will make companies like Slack unable to compete against them.
The European Union enacted numerous acts, such as the General Data Protection Regulation (GDPR), in 2018, to prevent these companies from gaining excessive power, marking a significant step in regulating how tech giants manage user data. Companies must obtain exclusive consent for data collection and processing, guaranteeing transparency in the use of personal information. The EU has also introduced the Digital Markets Act (DMA) and the Digital Services Act (DSA) in 2020 and 2021 to curb the power of tech giants and hold them accountable for illegal content, disinformation, and anti-competitive practices. So how do these acts help the EU to keep the big companies in check?
General Data Protection Regulations (GDPR)
GDPR applies to any organization that processes the personal data of individuals residing in the EU. GDPR gives European citizens several rights over their personal data. Organizations must guarantee the protection and proper storage of personal data. If there is any breach of personal data, the companies should notify the EU within 72 hours, or else it will face the consequences. This act has set a new standard for data protection, influencing similar laws in other parts of the world, including Brazil’s LGPD, California’s CCPA, and India’s Digital Personal Data Protection Act (DPDPA). Using this act, the French data protection authority fined Google 50 million euros for failing to provide transparent information and valid consent for personalized ads.
The Digital Services Act (DSA)
DSA’s goal is to protect users from illegal content and harmful information on social media. It concentrates on establishing a secure environment for its users and enhancing transparency. DSA aims to control information that is harmful to its users, such as live scenes of the Ukraine-Russia war and the COVID-19 pandemic. Platforms like Amazon, Google, Meta (Facebook, Instagram), and Microsoft are subject to stricter requirements under the DSA because they are massive operating platforms. The DSA requires platforms such as Instagram, TikTok, and YouTube to inform users about the purpose of certain ads and the data used for ad targeting. This practice helps users control what data they consume and how to avoid it.
DIGITAL MARKETS ACT (DMA)
We use DMA to address anti-competitive behavior in digital markets. The design aims to promote fair competition and prevent dominant tech companies from abusing their market dominance. The DMA classifies companies such as Apple, Amazon, Google, Meta, Microsoft, and others as gatekeepers. It is crucial for these gatekeepers to integrate their services with third-party companies, thereby providing them with the necessary exposure to compete in the market. Gatekeepers cannot favor their own products or services over those of competitors. For example, Google must not prioritize its own services (such as Google Shopping) over those of third parties in their SEOs. Gatekeepers like Apple, Google, Amazon, Meta, and Microsoft will have to restructure their business practices to comply with the new rules. Despite being exclusive to the EU, this act has garnered significant interest from many countries. The United States wants to implement this act to keep companies in control. The main goal of DMA is to stop anti-competitive practices and third-party company growth.
OTHER NOTABLE ACTIONS OF EUROPEAN UNION
The European Union recently passed new regulations as part of its broader push for sustainability, requiring that smartphones, including Android devices, have easily removable and replaceable batteries. This regulation is part of the EU’s effort to reduce electronic waste (e-waste) and promote more sustainable consumption patterns. And the EU pushed smartphone companies to USB-C standardization, which changed every gatekeeper and even made Apple change their exclusive pin into USB-C. This will reduce the e-waste produced by smartphones.
How EU’s Acts Benefit India
Since most gatekeeper companies operate in global markets, they must adapt the same policies to each country. India can also implement regulations against these companies, drawing on the experience of the European Union. The GDPR inspired India’s proposed Data Protection Bill, and as EU regulations compel global companies to adhere to stringent data protection standards, India will reap the benefits of these changes. India can learn from the EU and implement regulations such as DMA, DSA, among others. This will create numerous opportunities for many third-party Indian companies to flourish in their home countries. India has also embraced the standardization of USB-C, recognizing that Apple would suffer if it solely implements changes in Europe. India will soon implement the removable battery as well.
Future EU Actions Against Tech Giants
The EU aims to promote sustainability through regulations that address e-waste and resource consumption. Future actions may involve more stringent guidelines for tech companies regarding product design, repairability, and recycling. The EU is expected to enhance its competition policies to address emerging monopolistic practices and ensure a fair playing field for all businesses. The EU could cooperate with India, the USA, the UK, and Australia to implement stricter regulations to keep the gatekeepers in complete control. Future actions by the EU against gatekeepers will primarily concentrate on updating their regulations and devising strategies to reduce e-waste. The EU is expected to exert more control over gatekeepers than they currently do.
