EU agrees on landmark bill that takes aim at Big Tech

The flag of the European Union (Representative image)

The European Union (EU) member countries have reached an agreement on a landmark bill meant to level the playing field for smaller players against big tech by introducing sweeping changes in the way technology giants do business.

"The Digital Markets Act (DMA) will blacklist certain practices used by large platforms acting as “gatekeepers” and enable the commission to carry out market investigations and sanction non-compliant behaviour," the EU said in a press release.

Also Read: EU split on Russia oil sanctions, mulls other steps

The announcement aims to enforce interoperability of messaging platforms like WhatsApp, iMessage and Facebook Messenger, which will all be forced to open up their platforms, "and interoperate with smaller messaging platforms, if they so request”.

EU said the change would allow customers to exchange messages between services, send files and make video calls. Targeted advertising would only be allowed with explicit permission of the "gatekeeper".

Gatekeeper is the new category EU is using to define any firm with a market capitalisation of at least €75 billion, 45 million monthly users and has an app for the platform. Under this classification, EU has included Big US Tech companies such as Microsoft, Meta, Google, Amazon and Apple.

Under the new act, customers will also be able to freely choose their browsers, preferred virtual assistants and more. Some companies like Apple will be required to allow the uninstallation of system apps like Safari.

DMA will also force the bigger firms to hand over analytical data to independent businesses that use their platforms, so that they can gauge their performance. This also applies to any data bigger platforms generate for businesses using their service.

Also Read: Twitter to comply with EU sanctions on Russian state media

This also applies to analytical tools for ads. For example, if a company runs an ad on Facebook, the platform must provide them with tools to verify the campaigns.

Companies will also not be able to give preference to or put their products first on platforms they run. Amazon, for instance, will not give preference to its products in search results on its store, or run campaigns advertising its products.

App Stores will not be able to force app developers to use certain services like payment systems to give them a place on the app store. They will be free to advertise third-party payment vendors if they so choose.

Use of payment services by developers has been a thorny issue in India as well.

If a company refuses to abide by the new rules, the EU is free to impose fines of up to 10 percent of the company's total worldwide turnover.

In case of repeat infringements, the fine can be raised to 20 percent of total worldwide revenue. If the infringements continue, then the EU can ban the company for a certain period of time.

The legislation has not been passed yet, EU still has to finalise the language but is confident that DMA will come into effect "sometime in October".

Companies will be given time from three months to up to four years for the changes to be made, depending on the integrations requested.