American giant technology companies (Big Tech) have developed a very high opinion of themselves and something needs to be done about it – that is the message that governments around the world wanted to get across throughout 2020, with tensions escalating by the end of the year.
For years, nations have allowed companies like Google, Facebook and Amazon to operate with relatively little scrutiny or accountability. But now the giant American tech companies are being targeted more than ever by regulators in both Europe and the rest of the world.
New laws on Big Tech are being announced by many countries at a pace that will force some of the world's most valuable companies to radically change the way they operate and "earn" their billions. There are also talks of breaking up monopolies.
Dom Hallas, executive director of the Digital Economy Coalition, a UK, told CNBC that other nations will likely follow in the footsteps of US regulators.
Europe's Digital Services Act
The European Commission, the EU's executive arm, presented its proposals for digital services and digital markets on Tuesday. The proposals will only come into effect if the European Parliament votes in favour of them.
The measures are designed to "rethink" the digital market in Europe and force tech giants to operate in new ways. The legislation, which is the biggest overhaul in decades, focuses on increasing competition and making online platforms responsible for the content they host.
If Big Tech doesn't comply, they could face fines of up to 10% of their annual turnover. For Google, that would be $16.2 billion, while for Facebook it would be $7.1 billion.
If they repeatedly engage in anti-competitive behavior, then the EU could try to “break them up,” the Financial Times report published on Tuesday said.
However, Anders Borg, a former Swedish finance minister and consultant for New York-based software company IPsoft, said that increasing technology regulation is likely to be “counterproductive” for Europe.
Rich Pleeth, a former Google marketing director who now works as a management consultant, told CNBC that he believes Facebook will be most affected by the legislation, with Twitter and YouTube close behind.
Fines for harmful content
Also on Tuesday, the United Kingdom announced that Ofcom will fine social media companies up to 18 million pounds ($24 million) or 10% of their annual global revenue, whichever is higher, if they fail to rid their platforms of illegal and toxic content.
Social media platforms that host user-generated content or allow users to talk to others online should remove and restrict the dissemination of content that contains child sexual abuse, terrorist material or suicide, the government said. They should also do more to ensure children are not exposed to bullying.
Facebook, Instagram, TikTok, Twitter and other popular social networks should set out clear terms and conditions that define how they deal with content that is legal but could cause significant physical or psychological harm to adults, such as misinformation about COVID -19.
TikTok said Tuesday it will begin placing a banner on all vaccine-related posts. When clicked, users will be taken to information published by trusted sources, such as the World Health Organization.
Antitrust lawsuits
The Federal Trade Commission (FTC) and a coalition of attorneys general from 48 states filed two separate antitrust lawsuits against Facebook last Wednesday.
The lawsuits target two of Facebook's most significant acquisitions: Instagram and WhatsApp. Both lawsuits seek remedies for alleged anticompetitive behavior that could lead to Facebook being required to divest the two apps.
Another major battle has been brewing between Apple and developers who create apps for its App Store. Apple currently takes a 30% commission on in-app purchases, but companies like Spotify and Fortnite 's Epic Games believe that this is unfair and anti-competitive. The latter has filed a lawsuit, while Apple is seeking damages for breach of contract.
Information source: cnbc.com
