European Union targets tech giants with new tax and content rules

In its continuing attempts to rein in the power and influence of tech giants including Apple, Google, Facebook, and Amazon, the European Commission is introducing proposals intended to affect their activities. EU official Vestager hopes to use the proposals to fundamentally change the responsibilities of the companies, which in theory will go further than current laws currently cover.

"It's a full complex of things. It's not done with just one piece of legislation," said Vestager in an interview attended by the Wall Street Journal. "After the first mandate and the first specific competition cases, what I have seen very clearly is that we need rigorous competition-law enforcement, but we also need regulation."

The initiatives cover a number of areas, and have been outlined over the last few weeks by the EU and the European Commission. In early July, Vestager detailed three of the areas that are anticipated to be affected by new legislation, that are likely to be presented to the European Parliament before the end of 2020.

Content Moderation

One of the areas is to determine what the responsibilities of tech companies are regarding content posted by users. Currently under public consultation, the changes to the current Digital Services Act would update rules initially determined in 2000, which Vestager believes are already out of date.

The Digital Service Act was made at a time "when no one could have foreseen the situation we're in today," said the competition chief, "that platforms would not just be channels, but full ecosystems where a lot of what is ongoing and monetized by the platform itself."

Current rules insulate platforms like social media networks from being sued for controversial or deceitful content, but the situation has led to tech firms being slow to moderate user content. There have been suggestions of scaling back protections by lawmakers in both the EU and the United States to curtail misinformation, with the rules thought to be the EU's answer to the problem.

Rather than demanding platforms suddenly become liable for content or fake goods put up for sale, Vestager suggests the rules would allow for the creation of redress mechanisms for removed content.

As part of the same measures, companies operating such platforms would have to establish themselves as business entities within Europe to allow them to be "governed by these sets of rules," adds Vestager.

Apple has already passed comment on the Digital Services Act proposals, suggesting the "limited liability regime has helped deliver choice and innovation," but simultaneously advising for any new rules to be flexible in nature. "What makes sense for public-facing, content-sharing platforms may not be appropriate or technically feasible for services used to facilitate private communications or storage," Apple continued.

Competition

For competition, Vestager claims she wanted to have enhanced investigative powers to order companies within a sector to change how they behave, with a view to curbing monopolies and to "prevent new gatekeepers from arising." Legislation proposals also include measures to prevent major firms from crushing smaller competitors in the same market, an initiative inspired by a trio of antitrust cases laid against Google.

The Commission is currently running a pair of probes investigating Apple, specifically covering Apple Pay and the App Store, with the latter particularly looking into whether Apple has created a "gatekeeper" role for itself.

Digital Taxes

Another controversial element is digital taxation, which the EU is preparing to proceed with despite a disagreement with US lawmakers over the matter. The Commission advised it would do so as it had repeatedly warned its own tax measures would be proposed if international discussions failed before the end of 2020.

According to Vestager, such a digital tax that affects Apple and other large-scale multinational tech firms is justified because it is fair.

"So many businesses have to work very hard to make a profit, and from that profit to then pay taxes," Vestager suggested. "They should not be met with competitors for capital, skilled employees and customers who do not contribute to society. That has nothing to do with where you come from, it has to do with doing business in an equal manner."