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Have you ever googled “dress clothes in the area”, or mentioned how you need to grab new food for the dog, then the next day or even hours later an ad for Macy's or a dress shop you have never heard of appears on your phone? Amazon all of a sudden is suggesting dog food ahead of any other typical suggestion, and the same with Facebook. Last Thursday the EU agreed on a new law that has the potential to change that.
The Digital Markets Act, going into effect next year, is aimed to limit the amount of power big tech companies hold with their vast resources and unfair advantage against competitors. This law could potentially reshape app stores, e-commerce, online advertising, and any other regularly used digital tool; not to mention allow room for other options and foster more market competition. This would mean that large companies will not be able to offer targeted ads without users' consent, and could limit how sites can rank their own products and services ahead of those offered by smaller competitors. The DMA would also limit the number of investigations into companies' unethical behavior. These can take years to resolve and negatively impact companies' revenue and market share. Both the New York Times and the Wall Street Journal state that this is the biggest proposed expansion of global tech regulation in decades.
United States lawmakers as well as other countries have been looking for a way to get a handle on the power of global tech giants for a while. There hasn't been a piece of digital policy since the GDPR privacy law that came into place in 2018. Smaller rivals and other tech critics have their fingers crossed for this legislation to become a global standard. If provisions in the text are agreed on, this would allow developers to make their apps available to iPhone users, without having to go through Apple.
While many countries are mirroring these laws, there is obviously some pushback from larger companies. Apple believes the “one size fits all” legislation could “undermine consumer protections and choice” and “will create unnecessary privacy and security vulnerabilities”. Google has said to agree with the text on consumer choice and interoperability but cautions against the impact it will have on innovation. Representatives of Amazon, Meta, and Microsoft have not yet responded after the agreement was reached last Thursday. Overall, those who support the tech industry believe the law discriminates against big U.S. companies and will reduce technological innovation.
The DMA is a part of multiple recent regulations aimed at limiting dominant tech companies' market power. There is an additional piece of legislation that would force platforms and social media companies to take action in preventing the spread and range of illegal and harmful material. The Digital Markets Act is affecting how countries view our privacy and advocate for fair market competition. Many countries are inspired and taking action as a result of this Act. The UK government has been working on a code of conduct similar to the DMA. In addition, another bill addressing the share of industrial data was proposed last month.
Violating this law can result in a loss of at least 20 percent of their global revenue. This means potentially tens of billions of dollars for companies who continually violate the DMA. The Digital Markets Act legislation awaiting final approval from parliamentarians and representatives from EU countries. The DMA is the first step in holding big tech companies accountable, and the support from many shows optimism in its effectiveness. Only time will tell, as more information unfolds in the next year.
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