EU could shut misbehaving tech firms out of single market
According to the Financial Times, the European Commission is due to propose a new set of rules known as the Digital Services Act, which will seek to hold tech companies to higher standards. Under extreme circumstances, offending companies could be excluded from the EU.
The first draft of the Digital Services Act – which will update the e-Commerce Directive, the 20-year-old framework for digital services in the EU – is expected to be unveiled by the end of 2020. It will then need to be passed by the European Parliament and the European Council.
The bill would increase the responsibilities and liabilities of tech companies, particularly regarding content on social media platforms. Breton said that EU regulators are preparing a list of activities that tech companies would be required to eliminate.
It may also establish a rating system which allow the public and shareholders to score companies on factors such as tax compliance and – for online platforms – how quickly they remove illegal content.
Under these proposals, tech companies may be forced to break up or sell some of their European operations if their market dominance is judged to be a threat to the interests of consumers and competitors.
Sanctions could be earned for serious anticompetitive behaviour, such as preventing users from switching to a competitor’s platform or forcing them to use only one service. Under extreme circumstances, some tech companies may be excluded from the single market altogether.
Breton compared today’s tech giants to banks before the financial crisis, in terms of their size and apparent unwillingness to take responsibility.
“There is a feeling from end-users of these platforms that they are too big to care,” he said. “We need better supervision for these big platforms, as we had again in the banking system.”
European leaders, and other OECD leaders, are under pressure to agree on rules for the fair taxation of technology companies which can be applied internationally, in order to prevent wealthy tech companies from shifting their revenue to countries with favourable tax rates.
In July, the French parliament approved plans for a digital services tax of three per cent on digital companies with global revenue above €750m and French revenue of over €25m.
