Tech giants could face billion-dollar fines from Brussels in expected rule-change

Tech giants could face billion-dollar fines in Europe if they fail to abide by new Brussels rules geared to reduce their market dominance. 

The Digital Services Act, which is due to be presented by the EU’s Thierry Breton and Margrethe Vestager on Tuesday, is set to lay out new rules for companies deemed "gatekeepers", a designation expected to be given to tech giants such as Google, Facebook and Amazon, and covering companies which hold a significant positions in digital markets.

The EU is rumoured to be planning to impose fines of up to 10pc of companies’ annual revenues if they breach the rules, which will require them to stop doing things such as ranking their own services higher on search engines or competing unfairly against those using their sites using data gleaned from other services. 

According to Bloomberg, which has seen a draft version of the regulation, businesses which “systemically infringe” rules could be forced to sell parts of their operations.

An unconfirmed draft report leaked to Euractiv also suggested companies will have to provide annual reports on their content moderation practices. 

They will have to open up their recommendation ‘black boxes’ revealing exactly why their algorithms have promoted a piece of content: "Consequently, very large online platforms should ensure that recipients are appropriately informed, and can influence the information presented to them," the report reads.

"They should clearly present the main parameters for such recommender systems in an easily comprehensible manner to ensure that the recipients understand how information is prioritised for them."

They will also have to give the public access to "repositories of advertising" to "to facilitate supervision and research into emerging risks brought about by the distribution of advertising online, for example in relation to illegal advertisements or manipulative techniques and disinformation."

The new rules, which are said to still be in the process of being finalised, are set to come less than a week after the UK’s competition watchdog recommended a similar regime in Britain. MPs will have to vote on those measures. 

In the EU, rules will also be subject to feedback from the European parliament and EU countries.

It is thought that Brussels will be basing its definition of "gatekeeper" companies on the number of EU users the organisation has and their overall revenue — a move which could see US firms disproportionately hit given their huge presence in many markets.

However, some European companies have warned that they could also fall under the new regulation, the most vocal being booking site Booking.com.

Earlier this year, boss Glenn Fogel told the Telegraph that the idea of including Booking.com was "just nuts". 

“Travel is so competitive. We’re fighting every day to get business — every single day.

“Booking.com is one of the very few success stories in Europe. The last thing I think anybody would want to do is come up with regulations that will hurt one of the few success stories and help many of the other non-European tech companies."