How Big Tech lost the antitrust battle with Europe – Ars Technica

Andy Yen has big dreams for ProtonMail, the secure email service he founded in 2014 that now has 50 million users worldwide. One day, he hopes, it could be a rival to Gmail, the communications behemoth owned by Google, which boasts over 1.5 billion users.

But he says Proton can never be a true competitor to Google while the Internet continues to be an unregulated Wild West. “We grow based on the goodwill of tech giants,” Yen says from his head office in Geneva. In fact, he says, the same goes for his company’s very existence. “Tech giants could today remove us from the Internet with zero legal or financial repercussions.”

Like Proton, many companies across Europe are pinning their hopes on the Digital Markets Act (DMA), the EU’s first overhaul of the rules that govern competition on the Internet in 20 years. It is one of two major pieces of technology legislation in the works in Brussels; the other is the Digital Services Act (DSA), which will cover areas such as privacy and data use.

It is the DMA which presents the greatest immediate threat to the digital empires built by so-called gatekeepers such as Google, Apple, Facebook, Amazon, and Microsoft over the past two decades. Lawmakers are expected to finalize the act’s wording and scope as soon as this week in a push to open up markets captured by Big Tech and allow local rivals to flourish.

The antitrust legislation has the potential to transform completely how these giant companies do business, disabling their core strategy of integration that has allowed them to tie in users, dominate markets, and capture billions of euros in revenues.

Aimed at firms with an individual market capitalization above €65 billion, the act will set out for the first time the rules of how large online platforms must compete in the EU’s market. It could, for example, force Google to give users the choice of alternative email providers when installing a new smartphone or Apple to open its app store to competing services.

It also gives regulators much sharper teeth—granting them broad investigatory powers, with the ability to hand out fines of up to 10 percent of global turnover for infringements or even in extreme circumstances to force repeat offenders to break up their businesses.

Kim van Sparrentak, a Dutch MEP who sits on the European parliament’s internal market and consumer protection committee, describes the legislation as a milestone in reining in Big Tech. “We are finally talking about [how] they are too big, about interoperability, something they really, really didn’t want. These are big, big wins.”

For decades, antitrust bodies in Europe and the US have been perceived as ineffective and too slow to react. Even though the European Commission has stepped up its antitrust actions in recent years, the fines that it has imposed are seen as simply the cost of doing business.

For example, Margrethe Vestager, the EU’s competition commissioner, has handed out roughly €10 billion in fines to Google over a decade, with what rivals claim has had little effect on opening up markets. Google is still contesting all the fines even after judges at the EU’s court in Luxembourg ruled the search engine giant was favoring its own services over competing offers. The company is appealing against the decision.

Now, the EU is dramatically escalating its antitrust war on Big Tech, and the Silicon Valley giants have been frantically trying to shape it to their own ends. According to the independently funded Brussels-based campaign group Corporate Europe Observatory, more than 150 meetings between Big Tech and EU officials have been logged since the start of the current European Commission in late 2019, involving 103 organizations.

But interviews with EU officials, lawmakers, and others suggest their efforts have been ham-fisted and largely in vain—and major companies are now shifting their attention to how they might comply with the legislation rather than derail it.

“There is no stopping or derailing the new rules,” says Thomas Vinje, a Brussels-based partner at Clifford Chance, a law firm that has represented rivals of Big Tech but also large players. “Big Tech lost the legislative battle.”