By Valentina Pop and Sam Schechner
BRUSSELS -- Big tech companies including Google parent Alphabet
Inc., Amazon.com Inc. and Facebook Inc. face a swath of proposed
European regulations aimed at curbing their alleged anticompetitive
behavior, making them pay more taxes and compelling them to
shoulder more responsibility for illegal content on their
platforms, said a top European Union official.
Margrethe Vestager, the EU's digital-policy and antitrust czar,
detailed for the first time a comprehensive plan of how she aims to
rein in U.S. tech giants, using a package of initiatives that the
EU has begun to outline individually in recent weeks. The aim is to
clearly delineate new legal boundaries for tech companies, rather
than just apply existing laws covering fields such as antitrust
regulation.
"It's a full complex of things. It's not done with just one
piece of legislation," Ms. Vestager said in an interview with a
small group of reporters. Ms. Vestager -- who in her prior term as
European competition commissioner leveled record fines on Google
and ordered Apple Inc. to pay Ireland $14.5 billion in allegedly
unpaid taxes -- last year was promoted to vice president of the
European Commission, the EU's executive arm, in charge of
competition and new legislation for the digital sector.
"After the first mandate and the first specific competition
cases, what I have seen very clearly is that we need rigorous
competition-law enforcement, but we also need regulation," she
said.
Tech companies have said that they want to work with the
commission to craft the new laws, but several have raised concerns
about elements of the proposals.
Ms. Vestager's regulatory plans would keep the EU at the
vanguard of a movement to more tightly regulate tech companies --
though other parts of the world are increasingly joining the
debate. The EU in 2018 put into force a data-protection regime
known as the General Data Protection Regulation, or GDPR, which was
mirrored in several other jurisdictions and inspired California's
data-protection measures that took effect in January. More European
regulation in the digital sector is likely to have an impact beyond
the Continent, with other jurisdictions following suit. The U.S.
Justice Department last month proposed rolling back rules that
limit companies' responsibility for what people post on their
platforms, and the U.K.'s antitrust authority has proposed creating
a special antitrust unit focused on digital markets, which could
have powers potentially including ordering large companies to share
data with smaller ones.
They come as most European governments that have rolled out
coronavirus contact-tracing apps are using Google and Apple's new
software framework to do so, including Germany and Italy. France is
the last big holdout, and its app has suffered from a low adoption
rate.
The EU in May published guidelines for governments and tech
companies on how to balance privacy with the need to gather
sensitive health data. Ms. Vestager has endorsed the kind of system
used by Apple and Google, in part because it leaves most user data
on the phone -- a rare instance of U.S. companies earning high
marks from European privacy advocates.
"If it's voluntary but people don't trust it and don't sign up,
it doesn't work," Ms. Vestager told The Wall Street Journal in an
April interview.
Last week, Ms. Vestager spelled out three separate pieces of new
legislation that are likely to be presented by the end of this
year, including one tackling platforms' liability for their
content. Several EU governments and the European Parliament have
advocated such measures, so the proposals are likely to win broad
support in principle and could become law as soon as the end of
next year.
The EU's current e-commerce rules date to the year 2000, "when
no one could have foreseen the situation we're in today, that
platforms would not just be channels, but full ecosystems where a
lot of what is ongoing is monetized by the platform itself," she
said.
She said the EU won't demand that platforms be "liable for each
and every post or fake bag that is put up for sale," but rather
that they create redress mechanisms that businesses and individuals
can appeal to when their posts and ads are taken down.
Another condition to be imposed would require platforms to
establish themselves as business entities in Europe, Ms. Vestager
said, "so that they are all governed by these sets of rules, and
that goes for platforms wherever they come from on this
planet."
Decades-old laws on the books in the U.S. and Europe have
shielded tech companies from much liability for what their users do
on their platforms. Policy kers on both sides of the Atlantic have
proposed rolling back those protections, blaming tech platforms for
allowing the spread of electoral misinformation,
coronavirus-related hoaxes and other malevolent posts.
The commission in June launched a monthlong public consultation
on proposed changes to the existing Digital Services Act, which
forms part of the new legislative package. Apple responded by
defending the current regime. "The limited liability regime has
helped deliver choice and innovation," the company's response said.
Apple also called for new rules to be flexible enough for a range
of service providers. "What makes sense for public-facing,
content-sharing platforms may not be appropriate or technically
feasible for services used to facilitate private communications or
storage," the company said.
Another piece of legislation, aimed at stopping platforms from
leveraging their dominance to quash smaller rivals and inspired by
the three EU antitrust cases against Google that brought fines
totaling more than $9 billion, would list prohibited practices.
Separately, Ms. Vestager is seeking enhanced investigative
powers that would allow her to order all companies in a certain
sector to change their behavior so they don't monopolize a
particular market. This would "prevent new gatekeepers from
arising, so we can still have the benefit of competition in the
market," she said.
In taxation, the EU is considering establishing its own digital
tax now that the Trump administration and European countries
including France have reached an impasse in international talks on
the topic. The European Commission, like several European
countries, has said over the past year that if international talks
fail by the end of this year, the bloc will put forward its own
digital tax proposals.
The EU has proposed establishing a dedicated
technology-and-trade dialogue channel with the U.S. to iron out
such issues. "We will do what we can in order to make that happen,"
she said.
Ms. Vestager said a digital tax is justified by fairness. "So
many businesses have to work very hard to make a profit, and from
that profit to then pay taxes," she said. "They should not be met
with competitors for capital, skilled employees and customers who
do not contribute to society. That has nothing to do with where you
come from, it has to do with doing business in an equal
manner."
In a submission to the commission last week, Google cautioned
against adopting strict rules prohibiting it from promoting its own
services, for which it has already been fined by the EU. The
company said the practice could help users, citing as an example
its practice of putting its own maps on top of some Google
searches.
Google is the object of preliminary antitrust investigations
into several of its nonsearch services, with the commission having
sent out new requests for documents in recent months, Ms. Vestager
said.
Facebook has said the goal of the proposal might not be to
address an "enforcement gap," but rather "lowering the legal and
evidentiary standard for intervention" to allow the commission to
act and impose remedies.
Tech lobbyists are also pushing for caution before enacting new
rules. "The commission should carefully weigh evidence of new
potential theories of harm against the potential costs of top-down
intervention," said Kayvan Hazemi-Jebelli, competition and
regulatory counsel for the Computer & Communications Industry
Association, a lobby group that represents companies including
Amazon, Facebook and Google.
Write to Valentina Pop at valentina.pop@wsj.com and Sam
Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
July 05, 2020 14:09 ET (18:09 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.