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  • It is a revolutionary move.

  • The European Commission is putting forward new rules that will shake up how Big Tech works.

  • These enormous companies are wary of the regulation  and complain it could hinder innovation.

  • So why is the European Union getting so tough on Big Tech?

  • Over the past few years, the European Commission has opened a series of investigations

  • into companies such as Google, Facebook and Amazon.

  • This is because the European Commission is concerned about how powerful these companies have become.

  • The main worry is that they're preventing other smaller firms from competing in the European market.

  • But these investigations  have dragged on for years

  • resulting in lengthy legal  disputes and few practical changes.

  • A recent example is the case  involving Ireland and Apple

  • which has its European  headquarters in the country.

  • In 2016, the commission ordered Ireland, a member of the EU,

  • to recoup €13 billion in unpaid taxes from Apple. But both the Irish government

  • and the California-based iPhone maker have contested this decision.

  • The EU's general court said in July that the commission failed to prove

  • that there had been a tax advantage and the dispute has now proceeded

  • to the EU's highest court, more than four years after the case began.

  • There is a great deal of frustration by many, including the European Commission itself,

  • the parliament, member states, and many others

  • about the failure of existing competition law and competition enforcement.

  • And so there has been a sort of a rising tide towards regulating these companies.

  • But there is more: European policymakers have said that

  • the current rules were not designed for a digital economy and need to be updated.

  • We are coming from past years where the regulation has been fragmented,

  • where the regulation has become quite old to be honest,

  • and where enforcement and cooperation in Europe were quite limited.

  • The need for the European authorities to take our destiny in control

  • and actually to push for what they called digital sovereignty is reflected in this regulation.

  • This will be a game-changer.

  • At the same time, there's strong public support in Europe for tighter regulation of the digital giants.

  • Why do you think the European Commission is coming up with this new regulation now?

  • There is a lot of, you know, political backlash against the tech firms

  • and there is the feeling that something has to be done.

  • Many European countries have independently developed plans to tax tech giants more.

  • But there are concerns that a fragmented approach is less effective than rules applying across all 27 member states.

  • That's why the European Commission has been working on new regulation to prevent tech firms from abusing their powers.

  • The new rules are expected to be divided into two complimentary pieces of law:

  • the Digital Services Act and the Digital Markets Act.

  • The Digital Services Act is expected to police content on key platforms.

  • It will allow for increased oversight  of illegal and harmful content

  • and set rules for the use  of artificial intelligence.

  • The Digital Markets Act is set to make competition fairer

  • and reduce monopolistic behaviour. It could put an end to self-preferencing:

  • for example, when Apple displays its own apps at the top of the App Store.

  • These two acts could be viewed as revolutionary

  • They will, I expect, to havedramatic impact upon Big Tech

  • and require dramatic changes  to their business conduct 

  • and indeed perhaps even to  their very business models.

  • This is why companies like  Google are making the case 

  • that the laws need to be written in a way that would soften the blow on their operations.

  • An example of a concern we might have: today, if you were to look for a restaurant on Google,

  • we can provide you with a map, a link to its opening hours, an ability to book.

  • Now, if the rules are written in the way that some speculate, it could be that we are no longer

  • allowed to combine that information in search resultswhich is a really helpful tool

  • not only for consumers but also for those small businesses.

  • We want to ensure that they can benefit from the best possible tools available.

  • Margrethe Vestager, Europe's competition chief, explained in more detail

  • what's likely to happen under the new regulation:

  • Those platforms would have to provide regular reports on the content moderation tools they use,

  • the accuracy, the results of those tools.

  • And they'd have to give us better information about the ads that we're seeing,

  • explaining for example who placed a certain ad and why it has been targeted at us.

  • This would be very unpopular with the tech firms, which have refused to disclose their algorithms for years.

  • It would also become another milestone in EU policymaking, just like the General Data Protection Regulation or GDPR,

  • which was introduced in 2018 and gave users more control over their data.

  • This regulation that is currently being developed is orders of magnitude strategically more important

  • than GDPR for the hearts of the business models and the reason is this:

  • the legislation seems willing to  prohibit a variety of practises

  • which have been the main way these  platforms monetize their investments.

  • But the implications of the upcoming rules go beyond the tech giants we're familiar with.

  • There are also concerns that it would reduce Europe's competitiveness

  • and ability to nurture homegrown tech giants.

  • Of the world's 20 biggest tech firms, only one is based in the EU.

  • Silicon Valley alone was the birthplace of three out of the five largest,

  • while across the Pacific, China's Alibaba and Tencent have rapidly grown bigger than any of their European competitors.

  • So what sort of impact do you expect this legislation to have on European innovation?

  • There is a risk, it would be foolish to say that there's no trade-offs.

  • The next European unicorn could be falling within the scope of this legislation.

  • Well it's important to get the detail of the rules right to enhance innovation in Europe.

  • I think one of the most important routes to innovation is the route to scale.

  • People ask me, you know, why isn't there a European Google, or Facebook, or Twitter, or you know, anything.

  • And I think having a digital single market with clear rules across all those countries

  • can really help people get to scale faster, with less bureaucracy.

  • So, is there anything that Big Tech can do to avoid the new rules?

  • I think the chances of those  who oppose this legislation 

  • to actually stop it, to prevent it from being adopted,

  • are pretty close to zero. It's going to happen.

  • These companies have, of course, extraordinary resourcesso they will have their armies

  • descend upon the EU institutions and arguing why this legislation should not be adopted.

  • That again I think is bound to fail but they might be able to have some influence over specific provisions.

  • It will take some time before  these proposals become law 

  • but the EU certainly hopes they  will change how Big Tech works.

  • Hi everyone. Thank you so much for watching.

  • Do you think Big Tech needs to be regulated more?

  • Let us know in the comments section and I will see you soon.

It is a revolutionary move.

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Why the EU is getting tough on Big Tech | CNBC Reports

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    Summer posted on 2020/12/15
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