Brexit has been a disaster for the U.K., with most Brits now recognizing the country’s European divorce as the wrong decision. But 2016’s seismic referendum result is also playing out very badly for Big Tech.
Before Brexit took effect three years ago, companies like Microsoft and Google had plenty of run-ins with the EU’s enforcers, especially regarding antitrust violations that ended up being very costly. But at least they could take comfort in the fact that one particular violation would only earn one European mega-fine. That is no longer the case.
This morning, the British government unveiled the Digital Markets, Competition and Consumers (DMCC) Bill, which would give even more power to the U.K.’s antitrust watchdog as it tackles Big Tech.
The Competition and Markets Authority has already been very active in the field over recent years, with recent examples of its actions being the unwinding of Meta’s Giphy purchase and the freezing of Microsoft’s Activision Blizzard takeover—but it still lacks serious fining powers. If the DMCC Bill passes as proposed, the agency will be able to levy fines as high as 10% of a company’s global annual revenue.
The EU’s new Digital Markets Act, which will come into effect next week, also enables fines as high as 10% of global turnover—so particularly egregious violations could earn a Big Tech firm a massive double whammy in Europe alone. Again, that’s twice the pain that would have been possible had the U.K. decided to stay in the EU. And the same potentially goes for violations of the General Data Protection Regulation, which is these days not only an EU law but separately also a British law, carried over from pre-Brexit days, with the same 4%-of-global-turnover maximum fine.
Meanwhile, the EU today gave companies such as Google, Meta, and Twitter the official designation of “VLOP,” which may sound like some sort of extraterrestrial-object classification but instead means “very large online platform” (or very large search engine). That means the companies will be subject to the strictest rules in the EU’s incoming Digital Services Act (DSA), regarding things like content moderation and algorithmic transparency.
The DSA’s fines run to 6% of global turnover. Here, the U.K. is playing worse cop to the EU, with its massively controversial Online Safety Bill—similar in some ways to the DSA, with the added feature of forcing tech firms to undermine strong encryption in people’s chats—turning the dial up to 10%.
The EU and U.K. are not simply replicating each other’s approach to tech regulation—Big Tech’s cheerleaders have recently been praising the U.K.’s relatively light-touch approach to A.I., for one thing—but they’re not terribly far apart. And for the large tech companies in their sights, that means double trouble.
PS Mega-fines are one thing, but changing companies’ behavior makes a bigger impact across the globe. The CMA’s recent Meta and Microsoft actions prove that point, but for the latest example, witness the EU’s antitrust authorities reportedly forcing Microsoft to unbundle Teams from its Office suite, in response to a Slack complaint.
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David Meyer
Data Sheet’s daily news section was written and curated by Andrea Guzman.
