09/17/2020

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The EU’s “Hit List”



Silicon Valley Back in the Spotlight Overseas

Last week, a House of Representatives subcommittee announced tech giants Apple (AAPL), Facebook (FB), Google (GOOGL), and Amazon (AMZN) are getting too big and squeezing out competitors. This week, regulators from the European Union are also aiming to rein in big tech’s power. On Monday, the EU reported it’s working on a “hit list” that will target up to 20 major tech companies. The list could include Facebook, Google, and Apple.

Regulators plan to look carefully at businesses that dominate a big portion of market share and have many users. They’ll also take a look at companies whose platforms are so big that competitors have to use them in order to operate their businesses. These criteria, among others, make it likely the effort to monitor companies will focus mainly on American ones. “Big platforms are invasive, they pay little tax and they destroy competition,” said one person close to the EU talks.

Beyond the “Cost of Doing Business”

The EU promises its new regulations will include more than just fines. This pledge follows recent complaints that Europe’s existing regulatory structure hasn’t been effective in encouraging competition or controlling American tech giants.

Typically, when the EU fines companies for antitrust infractions, big tech companies pay up and move on. Tech companies see those fines as the “cost of doing business,” and the EU argues they’ve grown too big to care about financial penalties. This time, however, regulators could attempt to break up the greatest offenders. At a minimum, the EU could require companies to share data with competitors.

Meanwhile, the EU is working on a new Digital Services Act to establish new rules for how platforms operate on the internet in Europe. This is the first time in 20 years the EU has worked on new rules for the internet.

Google Faces Challenges Back Home

Stateside, Google specifically is facing looming charges for alleged antitrust violations that could force the company to pare off Google Chrome and divide up its advertising business. Competitors have accused Google of taking advantage of user’s web histories on the Chrome browser to target them with advertisements. Last Friday, people close to the Department of Justice said charges against Google could be coming soon. If prosecutors don’t ask Google to sell Chrome, they may restrict how Google can use Chrome data in advertising and other products. Chrome is used by a majority of desktop computers—almost 60% according to some estimates.

Separately but related, the Justice Department could charge Google as soon as this week with violations of competition in search. If the DOJ decides to move forward, the case could be the biggest one against an American tech company in decades. Regardless, Big Tech companies like Google and others are facing increasingly heated tension on both sides of the pond.


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