What does the EU Digital Market Act that scares Silicon Valley giants say?

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What does the EU Digital Market Act that scares Silicon Valley giants say?

Author | Xue Xiaowan

Edit | Jingyu

"She really hates America. 」

Four years ago, at the G-7 Summit, former US President Trump publicly complained to world leaders about Margaret Vesta, the director of the EU Antimonopoly Office, who has always been known for her "strictness".

Vestag is a hardliner and an important promoter of EU technical supervision. During her tenure as the Competition Commissioner of the European Commission, she was known as the "Silicon Valley Policewoman" because she frequently issued sky-high fines to American technology giants such as Apple and Google.

At present, her consistent anti-monopoly action plan has made breakthrough substantive progress.

On the evening of March 24th, local time, in Brussels, the EU headquarters, member states and legislators reached an agreement on the Digital Market Act (DMA) and published the final text.

This new regulation is aimed at the anti-monopoly governance of Apple, Google, Meta (formerly Facebook), Amazon and Microsoft, aiming at regulating the business behavior and market dominance of the five major European companies. Silicon Valley giants who meet the "gatekeeper" standard will face the risk of huge fines or even being split once they violate the provisions of the bill.

The style of the bill, like its leader Vestag, is strict, tough and clear about likes and dislikes. The external evaluation of DMA is "the first comprehensive revision of Internet competition rules in the EU in 20 years", and it is also "the most comprehensive science and technology supervision legislation in the EU after the adoption of the General Data Protection Regulation (GDPR) in 20 18", which has a milestone and far-reaching influence on a global scale.

The bill may reshape the operation mode of application stores, online advertisements, e-commerce, SMS services and other daily digital tools, and change the existing core business and business model of large technology companies.

Just one week after the DMA was finalized, Vestager said that another major antitrust sister proposal, Digital Services Act (DSA), is expected to be finalized in April, focusing on the platform's regulatory responsibility for content and targeted advertising.

With the EU's double arrows, the "gatekeepers" will naturally not sit still. However, after a round of fierce lobbying, their protest speech did not change the attitude of the EU and the realistic legislative trend. According to EU legislative procedures, the final version of the law will be submitted to the European Parliament and the Council of the European Union for voting, and will be implemented in all member States six months after its entry into force.

In fact, the final voting session is just a formality. Vestager predicts that DMA will take effect on June 65438+ 10 this year. The new rules and boots are landing, and the real future is unknown. What is unwilling to be tamed is the big Internet companies on the other side of the Atlantic.

Before Trump's voice, Apple CEO Cook also publicly expressed his dissatisfaction with Vestag, thinking that it was "unfair policy" for her to let Apple pay more taxes.

Vestag is the number one standard-bearer who advocates anti-monopoly and technical supervision of the Internet in the European Union and even around the world. In 20 14, she became the Commissioner for Competition of the European Union. In 20 19, she was appointed as the Executive Vice-President of the European Commission, holding the power to build a digital governance strategy in Europe.

Most of her colleagues will be subject to various restrictions on their power, but she is an exception-she can not only stop the merger of companies, launch a raid on private offices, but also impose huge fines on multinational companies.

The outside world is afraid of the power of Westergue. On Twitter, her colleagues were ridiculed as slow-witted idiots or scheming politicians. In contrast, Westergue is portrayed as a "medieval queen of force" with arrogant eyes and two big tomahawks.

It was under the impetus of the Iron Lady that DMA accelerated all the way from the initial proposal, and reached an agreement within the legislature after 16 months, laying the foundation for its final adoption. Under the EU legislative procedure, this series of actions is fast enough.

The so-called "gatekeeper" refers to a large-scale Internet online platform enterprise. These platforms usually have huge wealth, stably occupy the dominant position in the market, can connect huge user groups and enterprises, and also hold key data resources.

According to the law, a "janitor" must meet the following conditions:

According to these standards, the list of qualified gatekeepers is the top American technology companies in the global market value list. Apple, Google, Meta, Amazon and Microsoft all belong to the category of "curiosity". Among the local Internet companies in the European Union, only Spotify is expected to become one of them, but the current strength is not enough.

However, Vestag denied that DMA was only for the United States. "DMA is not aimed at some enterprises or the nationality of some enterprises. In an interview with the Financial Times last year, she said: "We are trying to figure out who should be within the scope of governance and who may become the gatekeeper, which is related to the market effect. 」

Another aspect of DMA is the high-precision standard. If the "gatekeeper" violates the regulations, the European Commission may impose a fine of 10% of the global income of the previous year; If it is a recidivist, the proportion can be increased to 20%.

For example, Apple's total revenue in fiscal year 20021reached $365.8 billion. If the EU issues an anti-monopoly ticket, according to the ratio of 10%, the "rich as an enemy" apple may have to cut its meat by nearly $36.6 billion.

"No company will be dismissive of a fine of up to 20% of its global income. Thierry Breton, EU internal market commissioner, said.

If an enterprise "refuses to change after repeated education", the European Commission has the right to conduct market research on it, split its business if necessary, and may prohibit them from acquiring other companies for a period of time.

DMA is a supplement to the competition law system of EU and its member states, and it does not affect the original competition law.

"In my seven or eight years as the EU Competition Commissioner, one thing I have learned is that dealing with some problems requires systematic answers and efficiency. At this year's South-by-Southwest Conference, Westergue said in an interview with foreign media that if illegal activities are allowed to exist, even if the time is short, competitors and consumers will face great pain and risks.

She expects that the new regulations can solve the systemic problems that cannot be solved by a single law enforcement action, simplify the struggle between the EU and the past technology giants through legislation, and establish a fair, open and competitive market.

On the evening of March 24th, local time, after eight hours of tripartite talks, the final DMA text was released.

As early as June 5438+February 2020, the European Commission put forward two heavy legal proposals in the field of digital compliance and supervision, namely DMA and DSA. At that time, there was no agreement on the standard and scope of the obligation of "gatekeeper" within the European Union.

Compared with the original version of the proposal, the new version of the bill that has been finalized has the following major changes:

1. Within the scope of "core platform services", web browsers and voice assistants are added, but Internet TV is not included;

2. Raise the threshold of "gatekeeper", increase the annual income to 6.5 billion euros, increase the market value to 65 billion euros to 7.5 billion euros and 75 billion euros respectively, and quantify the number standard of monthly end users and annual enterprise users;

3. Linkage with GDPR, strictly limit the cross-platform merger and processing of data by "gatekeepers";

4. Raise the upper limit of punishment from 10% of global income to 20%.

In reality, the anti-monopoly struggle between the EU and big Internet companies such as Google and Apple is a long and time-consuming tug-of-war. Anti-monopoly agencies in Europe and America have also been criticized for their low efficiency and slow response.

Gu Zhengping, a partner of Anjie Law Firm and an anti-monopoly lawyer, told Geek Park that this is because the determination of monopolistic behavior in the Internet environment involves a series of complicated legal and economic analysis.

Specifically, it involves how to define the relevant market, determine the market share and position, whether the enterprise has abused the dominant market position, whether the enterprise's behavior has reasonable commercial reasons and whether it has caused damage to market competition.

If the behavior suspected of monopoly not only causes a certain degree of competition damage, but also has the effect of promoting competition, it is necessary to comprehensively consider which role is more important between promoting competition and hindering competition, and to identify and analyze it in combination with specific business scenarios and industry characteristics.

For antitrust, constant dynamic change and innovation are important influencing factors.

In the PC era, governments around the world were very wary of Microsoft, a technology giant at that time, and used anti-monopoly law to conduct continuous investigations on Microsoft.

In the era of mobile Internet, platform enterprises have created a new business model, which leads to the lag of the original anti-monopoly laws and law enforcement methods, and can't keep up with various new formats spawned by scientific and technological progress and business evolution.

In Gu Zhengping's view, technology companies in the traditional PC era mainly rely on technology to promote, mainly serving offline traditional industries, and their business logic is relatively simple. The emerging Internet platform economy is deeply involved in all aspects of social life, and both users and related enterprises are more dependent on the platform.

Platforms, especially super platforms, have massive user data, have stronger network locking effect, and are more likely to have strong dominance and control. It is easier to use data to manipulate and mislead user behavior, abuse dominant position to suppress competitors and undermine fair competition in the market. Therefore, it is necessary for regulators to conduct more comprehensive and powerful supervision.

"The new DMA regulations set quantitative indicators to identify gatekeepers and a clear list of behaviors, which have strong directionality and greater penalties for illegal acts, which will help promote the investigation of Internet giants and improve the efficiency of law enforcement and justice." He said.

As a complement to DMA, DSA is expected to be finalized in April this year.

Different from DMA anchor "gatekeeper", DSA focuses on strict supervision of platform giants using their huge data resources to push online advertisements, especially prohibiting users from pushing advertisements to underage users, requiring the platform to undertake more content supervision responsibilities.

The actual impact and implementation effect of the new regulations need more time to verify. The European Commission indicated that it would set up an advisory committee and a high-level working group to be responsible for the concrete implementation of the bill in the next stage.

With a combination of boxing, the compliance "curse" on the heads of large technology companies is getting tighter and tighter.

Brussels is on the left and Silicon Valley is on the right.

The European Union is escalating its anti-monopoly war with large technology companies, while Silicon Valley giants are lobbying hard while continuing to protest.

Nick Clegg, president of global affairs of Meta, pointed out in his column that some details of the new law "may lead to the rigidity of the service model of products and hinder the continuous progress and iteration of technology".

An Apple spokesperson said that some rules of DMA may cause unnecessary privacy risks and security loopholes for Apple users, and will also hinder the company's income in intellectual property rights.

Google is worried that some rules of DMA will hinder the innovation process in Europe. Amazon is reviewing the impact of the new regulations on customers and entrusting research institutions to evaluate them.

At the same time, Silicon Valley giants are constantly lobbying Brussels to try to guide the direction of legislative supervision.

According to the data published by the Corporate Europe Observatory, an EU research group, since the establishment of the new European Commission at the end of 20 19, there have been more than 150 meetings between large technology companies and EU officials, involving 103 organizations.

However, in the eyes of EU officials, the lobbying efforts of technology companies are "clumsy" and futile. Seeing that they were wasting time before, big companies have changed their coping strategies and focused on how to comply with the new laws.

According to foreign media reports, the legal teams of Google, Apple and Amazon are already considering implementing new regulations as part of optimizing the company's business, including creating a new compliance department.

More crucially, these companies are facing the adjustment of their core business and business model. According to DMA, the potential changes of each family may include:

The changes listed above are only some of them. Some foreign media joked that the terms of this bill are like a "wish list" issued by Silicon Valley competitors.

"DMA ushered in a new era of global technology supervision and ended the growing dominance of large technology companies." On the night of finalization, Andreas Schwab, rapporteur of the Committee on Internal Market and Consumer Protection of the European Parliament, said.

Anu Bradford, director of the Center for European Law Studies at Columbia University, called the EU's legislative influence the "Brussels effect". Because the EU is one of the largest consumer markets in the world, most multinational companies can't ignore it, let alone give it up. This has brought regulatory confidence to the EU.

In addition, European legal rules usually provide a framework and sample for global supervision. For example, GDPR, known as "the strictest data protection law in history", has become a model law in Japan, Brazil and other countries.

Looking around the world, the anti-monopoly supervision of large-scale network platform enterprises has attracted the attention of many countries and become an irresistible governance trend and international common sense. High-frequency words in the field of digital economy such as data, algorithms and platforms have become the focus of expansion under the legal framework.

In China, the Anti-Monopoly Law, which was implemented in 2008, is in the first revision stage.

Article 10 has been added to the revised draft, stipulating that "operators shall not abuse data and algorithms, technology, capital advantages and platform rules to exclude or restrict competition".

The draft also adds a provision in Article 22: "An operator with a dominant market position uses data, algorithms, technologies and platform rules to set obstacles and unreasonably restrict other operators, which belongs to the abuse of dominant market position as stipulated in the preceding paragraph. 」

In June last year, 5438+065438+ 10, the State Administration of Market Supervision published the Guidelines on Classification and Classification of Internet Platforms (Draft for Comment) and the Guidelines on Implementing the Main Responsibility of Internet Platforms (Draft for Comment), which divided Internet platforms into three levels: super platforms, large platforms and small and medium-sized platforms, taking into account user scale, business types and limited capacity.

According to the regulations, the super platform needs to fulfill the corresponding main responsibilities, such as not giving preferential treatment to itself when providing related products or services; Promote interoperability between its own services and those provided by other platforms.

Back in the United States, the days of Silicon Valley giants are also difficult. Biden's government took practical action and did not show them mercy.

Last year, Biden appointed Lina Khan, Amazon's top critic, as the chairman of the US Federal Trade Commission, and arranged Jonathan Kanter, an antitrust lawyer known as the "old enemy of Silicon Valley", as the head of the antitrust department of the Ministry of Justice.

At different stages of development, history is changing and unchanging. Back to the end of 19 and the beginning of the 20th century, similar things happened in the New World.

According to the book "Four Hundred Years in America", "Old Roosevelt" delivered a speech after taking office in the White House: "Many Americans believe that large companies called trusts are harmful to public welfare in some functions and tendencies. This view is not caused by jealousy ... They sincerely believe that although the merger and concentration of enterprises should not be prohibited, they should be supervised and reasonably controlled. 」

In Roosevelt's view, this view is correct. At that time, "trust" was mainly concentrated in steel, automobile, oil and other industries.

After more than 200 years, wealth and resources have been transferred, and the focus of the global anti-monopoly narrative has become science and technology and the Internet, a new civilized force of mankind.