US Tech Giants Face Landmark Rules from EU Lawmakers
New laws are taking effect in the European market for tech companies, which affects US tech giants, but not casinos like Vulkan Vegas. For one, the new rules prohibit US companies from making it impossible for people to remove pre-installed software or apps.
The move is happening to support European creators. For example, it is typical for some phone models where Facebook is pre-installed, and you cannot uninstall it. This practice cannot be allowed in the new rule anymore.
It means that Google, Apple, Amazon, and other giants will have to do something to their programming. They can no longer force people to use their apps. This new deal curbs the tech powers of these giants.
France, which is currently the holder of the European Union presidency, said that the talks had taken eight hours. The result of the meeting was a provisional agreement.
The EU anti-trust chief Margrethe Vestager said that the new rule she proposed was in response to the slow pace of investigations regarding the competition. The Digital Markets Act or DMA is one basis, where it provides rules for companies that keep data and access to various platforms.
In the DMA, huge tech companies must make sure that their messaging platforms must be able to operate and enable business users to access information. Business users must also be able to compete for their services, so end-users have a choice.
The rules specifically indicate that companies must not prohibit other business apps from competing against them. It also means that an end-user must be able to uninstall pre-installed apps or software. For example, if you do not want to use YouTube, you must be able to uninstall it. Otherwise, the company, like Google, is violating the law.
This law, however, does not apply to all tech companies. It applies to those that have a market capitalization of 75 billion euros only. In addition, these are companies that have 45 million monthly users and annual revenue of 7.5 billion euros. If a company violates this, the fine is a hefty 10% of their annual global revenue. For repeat offenders, the fine can reach up to 20%.
What does it mean for end-users? It means that end-users are no longer tied to specific services. They no longer have to be forced to use apps that they do not like. YouTube is a prime example of this. If you buy an android device today, you cannot uninstall YouTube at all. If you are a parent, you are obligated to subscribe to and pay for the YouTube Kids app. It is cumbersome, to say the least, because there are many parents who do not like YouTube on their kids’ apps.
With the new law, parents can now remove YouTube and then give the phone or tablet to a young child with only educational apps.
On the other side of this law are companies that fight hard to reverse it. Apple, for one, is against it and lobbied hard to fight the DMA. Apple said that it was worried about the provisions of the DMA. They said that it would create an unnecessary vulnerability regarding the privacy and security of the users. Apple is also worried that they cannot charge for intellectual property, which they must because they spent a great deal of money to create.
Google, on the other hand, shares the same stance as Apple. Google says that while it supports some of the rules of DMA, some rules worry them because they prevent Google from innovating.
Key Takeaways from the DMA
Here are some quick points to ponder:
- The DMA is now being considered for adoption in the EU
- The DMA will restrict companies from preventing other app makers from competing with them
- Big companies also cannot make their apps “favoured” over other apps.
The DMA rule encompasses a wide net of applications, such as:
- Online advertising
- Social media apps
- Use of search engines
- Browsing apps or browsers
- Cloud computing
- Video-sharing services and apps
- Virtual assistants.
The rationale of the DMA is that they want to prevent tech giants from stepping on, or crushing, small companies. A walled system is not competitive. It prevents the small fish from penetrating the market. For example, on all android phones, Google Chrome is the default browser. The DMA will eventually prevent Google from doing this.
Is this fair at all? Well, consumers are the ones to decide. It is highly likely that consumers will love this rule in the EU. After all, just because somebody bought an Android phone does not mean that he wants Chrome as a browser. The same thing goes with Apple products, where the default browser is Safari. For Microsoft products, the default browser is Edge.
Consumers want to use their phones and tablets the way they like. In the case given earlier, there are many parents worried about their children using YouTube. Currently, there is no way to block a channel on YouTube. It is impossible for people to block a YouTube channel. Since there is no way for parents to watch over ther children all the time, kids may be able to watch content that is not for them.
With the advent of the DMA, there certainly are going to be changes in how tech giants work. Consumers will surely be happy that they now have the liberty to choose what apps they want to use on their phones and tablets.
Is this a bad deal? For the tech giants, yes, it is a bad deal. The reason they force people to use their apps is that they have more control over data gathering and also for advertising. For example, if there is no way to uninstall YouTube, your kids will have to use it—YouTube can show you ads, and Google earns more money from your ad views.
For the consumers, this is good news, as consumers want nothing more than the freedom to choose what apps they want to run on their phones.