TIGHTENING THE SCREW ON BIG TECH

The European union’s big battle to keep technology behemoths in check rages on.

 

THE European Union is on a mission to get US tech giants to stop avoiding tax, stifling competition, profiting from news content without paying and serving as platforms for disinformation and hate.

Last month, the European Commission announced that online retail giant amazon had agreed to make changes to its software to end two EU inquiries into its treatment of third-party sellers on its online marketplace.

the EU also warned Elon musk that twitter could be subject to sanctions under a future media law after the “worrying” suspension of several journalists from the messaging platform.

Here is a summary of the tussles between Silicon Valley and Brussels.

Stifling competition

The digital giants are regularly criticised for dominating markets by elbowing out rivals.

Last July, the European Parliament adopted the Digital markets act to curb the market dominance of Big tech, with violations punishable with fines of up to 10% of a company’s annual global sales.

Brussels has slapped over Us$8bil (rm37.7bil) in fines on Google alone for abusing its dominant market position.

In 2018, the company was fined Us$4.3bil (rm20.2bil) – the biggest ever antitrust penalty imposed by the EU – for abusing the dominant position of its android mobile operating system to promote Google’s search engine.

Google lost its appeal against that decision in September 2022, though the fine was reduced to Us$4.1bil (rm19.3bil).

the firm is also challenging a Us$2.4bil (rm11.3bil) fine from 2017 for abusing its power in online shopping and a separate Us$1.5bil (rm7.1bil) fine from 2019 for “abusive practices” in online advertising.

the EU has also gone after apple, accusing it of blocking rivals from its contactless iphone payment system, and fined microsoft Us$561mil in 2013 for imposing its browser, Internet Explorer, on users of Windows 7.

The European Commission is also looking into whether Facebook’s parent company, meta, broke antitrust laws by linking its personal social network to its classified ads service, Facebook marketplace.

Turning to taxation

The EU has had less success in getting US tech companies to pay more taxes in Europe, where they are accused of funnelling profits into low-tax countries like Ireland and Luxembourg.

In one of the most notorious cases, the European Commission found in 2016 that Ireland granted illegal tax benefits to apple and ordered the company to pay Us$13bil (rm61.2bil) in back taxes.

But the EU’S General Court later overturned the ruling, saying there was no evidence the company broke the rules.

The European Commission also lost a similar case involving amazon, which it had ordered to repay Us$250mil (rm1.2bil) in back taxes to Luxembourg.

In October 2021, following extensive lobbying by European countries, the G20 group of nations agreed on a minimum 15% corporate tax rate.

Personal information

Tech giants are regularly criticised over how they gather and use personal data.

The EU has led the charge to rein them in with its 2018 General Data Protection regulation, which has since become an international reference.

Companies must now ask for consent when they collect personal information and may no longer use data collected from several sources to profile users against their will.

Amazon was fined Us$746mil (rm3.5bil) by Luxembourg in 2021 for flouting the rules.

Meanwhile, Irish authorities have gone after meta twice this year.

Last September, they fined Instagram, a meta subsidiary, Us$405mil (rm1.9bil) for breaching regulations on the handling of children’s data.

and in November, they fined Facebook Us$265mil (rm1.2bil) over a massive data leak involving the details of more than half a billion users.

Fake news and hate speech

Social networks, particularly Facebook and twitter, are often accused of failing to tackle disinformation and hate speech.

In July, the European Parliament approved a Digital Services act that forces big online companies to combat hate speech, disinformation and piracy or face fines of up to 6% of their global turnover.

It comes into effect in 2023.

Paying for news

Google and other online platforms are also accused of making billions from news without sharing the revenue with those who gather it.

To tackle this, an EU law in 2019 created a form of copyright called “neighbouring rights” allowing print media to demand compensation for use of their content.

France was the first country to implement the directive.

After initial resistance, Google and Facebook agreed to pay French media, including AFP, for articles shown in web searches.

That did not stop the company from being fined Us$500mil (rm2.4bil) by France’s competition authority in July 2021 for failing to negotiate “in good faith”, a ruling Google has appealed.

Facebook has also agreed to pay for some French content.-AFP/The Star Malaysia 2 Jan 2023

34,000 more out of work in Eurozone

BRUSSELS: Unemployment in the eurozone remained at record highs in August and the number of people out of work climbed again, highlighting the human cost of the bloc's three-year debt crisis.

Joblessness in the 17 countries sharing the euro was 11.4% of the working population in August, which was stable compared with July on a statistical basis, but another 34,000 people were out of work in the month, the EU's statistics office Eurostat said yesterday.

That left 18.2 million people unemployed in the eurozone, the highest level since the euro's inception in 1999, while 25.5 million people were out of a job in the wider 27-nation European Union, Eurostat said.

The debt crisis that began in Greece in 2010 and has spread across the eurozone to engulf Ireland, Portugal, Cyprus and the much bigger economy of Spain has devastated business confidence and sapped companies' abilities to create jobs.

A European-wide drive to cut debts and deficits to try to win back that lost confidence has led governments to cut back spending and lay off staff, while stubbornly high inflation and limited bank credit are adding to household's problems.

Joblessness could go beyond 19 million by early 2014, or about 12% of the eurozone's workforce, according to a new study by consultancy Ernst & Young, predicting that rate to rise to 27% in indebted Greece. That compares with 24.4% in the country in June, the latest data available.

“In this difficult environment, companies are likely to reduce employment further in order to preserve productivity and profitability,” the report said.

Eurozone manufacturing put in its worst performance in the three months to September since the depths of the 2008/2009 financial crisis, with factories hit by falling demand despite cutting prices, a survey showed yesterday.

The International Monetary Fund expects the eurozone's economy to shrink 0.3% this year and only a weak recovery to emerge next year that will generate 0.7% growth.

But the joblessness picture also obscures wide regional variations. In Austria, unemployment is the eurozone's lowest at 4.5% in August, a slight fall from July, while Spain has the highest rate at 25.1% in the month.

While a bursting of a real estate bubble in Spain and the end of a decade of credit-fuelled expansion in Greece account for difficulties in the Mediterranean, policymakers still face the challenge of trying to revive growth across the bloc.

“The recession in the eurozone is due to the tough consolidation course in the peripheral countries, weaker global demand and the high uncertainty coming from the sovereign debt crisis,” Commerzbank economist Christoph Weil wrote in a recent research note.

Eurozone and UK central bankers will likely leave policy unchanged at their meetings this week, but both will announce additional measures to help their moribund economies before the year's end, according to a poll. - Reuters