Written by 2:28 pm European Union

As U.S. fails to crack down on Big Tech, Europe shows what progress looks like

By Jon Swartz

The absence of online protections for young children and teens from the omnibus spending package in Congress stings for both lawmakers and consumer-rights advocates, especially as Europe’s approach appears to produce results

With no significant antitrust legislation included in the sweeping $1.7 trillion omnibus spending bill that will wrap up this session of Congress, American lawmakers might want to look overseas, where Big Tech is briskly acting in accordance with new European laws and crackdowns.

Amazon.com Inc. (AMZN) agreed to settle two antitrust cases with the European Union this week related to allegations about the retailer’s treatment of third-party sellers on its platform. Microsoft Corp. (MSFT) is complying with European regulators on cloud- and Teams-related technology, according to multiple reports, while Apple Inc. (AAPL) is reportedly laying the groundwork to obey tough new EU rules that let iPhone owners pick apps from outside the company’s App Store.

Some U.S. public policy advocates were hopeful that Big Tech’s recent cooperation with the EU might nudge lawmakers here to finally push through antitrust legislation after years of inaction. Despite the boasts of bills and some ceremonial finger-pointing hearings aimed at tech executives, however, legal experts remained skeptical.

“There is a big difference between the sorts of targeted changes being implemented [in Europe] and the wholesale, no-self-preferencing regimes being contemplated in the U.S.,” Geoffrey A. Manne, president and founder of the International Center for Law & Economics, told MarketWatch.

Some of tech’s largest players are bending to European law and showing a willingness to change, primarily because of the Digital Markets Act, or DMA, which is part of the biggest overhaul of laws governing the world’s largest technology companies in more than two decades. The U.S. Senate’s American Innovation and Choice Online Act, by contrast, would impose an ambiguous overall obligation that would theoretically entail a host of unspecified and extremely broad changes.

More on the DMA: Landmark EU law could take billions from Apple, and already forced a major change at Google

The passage of the DMA has led to a rapid series of actions, the latest being Amazon’s negotiation with the EU of some specific changes to its platform, which is also in response to an investigation begun a few years ago by the European Commission’s department for competition, according to Manne. As part of that deal, Amazon will not pay a fine but will commit to giving third-party sellers on its digital platform an equal shot at being selected as the default option for buttons in Amazon’s so-called Buy Box and to allowing them to qualify for its Prime shipping program.

Similarly, Apple is getting a jump on things and developing software to adhere to new EU requirements scheduled to go into effect in 2024, according to Bloomberg News. Potential changes would give third-party apps such as Google’s mobile wallet and PayPal Holdings Inc.’s (PYPL) Venmo a better chance to compete against Apple’s built-in apps. (Apple is locked in a protracted court battle with Epic Games Inc., maker of the popular “Fortnite,” over its App Store rules.)

In-depth: Apple has spent decades building its walled garden. It may be starting to crack

Microsoft, meanwhile, continues to resolve issues with regulators rather than clashing with them as it did previously. Last week, acting proactively to head off the opening of formal EU investigations, the software giant announced a phased rollout of its “EU data boundary” for cloud customers and addressed EU antitrust concerns about its business practices following a complaint from Salesforce Inc.’s (CRM) workspace messaging app Slack.

For more: Microsoft has avoided U.S. antitrust scrutiny, but Europe is a different matter

Apple, Microsoft and Amazon are making the changes only in Europe, though, while continuing business as usual in the U.S., where agencies like the Federal Trade Commission and the Justice Department are pursuing legal actions in lieu of new laws that Congress has been unable to pass.

Tech laws in Asia, meanwhile, have prompted Apple and others to alter their app store operations. Earlier this year, South Korean lawmakers approved rules for a law that bans Apple and Google from forcing software developers to use their payment systems, and Apple has made changes to its app practices in Japan as well, in a concession to regulators.

Compliance in Europe underscores the fact that European regulators are years ahead of their American counterparts — and that the tech industry has shown an ability to dodge antitrust measures and other bills in Congress through lobbying and strategic spending, according to Raymond James analyst Ed Mills.

“On to next year,” Mills told MarketWatch.

“I don’t doubt those changes [in Europe by Big Tech] will be used by some to try to push for laws in the U.S.,” Manne told MarketWatch. “But, as I said, the regimes are quite different and even if certain changes are adopted in the EU, I don’t think they should be seen as evidence that the kinds of changes contemplated by the U.S. proposed legislation would be similarly acceptable.”

Read: What is a platform, and what should one do? The answer could determine the future of Apple and the rest of Big Tech

The exclusion from the omnibus spending bill of legislation that would significantly alter the business models of American tech giants led some U.S. lawmakers and consumer-rights advocates to respond with a flurry of statements highlighting their frustration. Much-ballyhooed bills to protect the online rights of children and the privacy of adults also did not make the cut this year, although a bill levying higher merger fees was included in the omnibus package.

“We are deeply disappointed and frustrated that Congress is poised to end the year without passing the Kids Online Safety Act and the Open App Markets Act,” Sens. Richard Blumenthal, a Democrat from Connecticut, and Marsha Blackburn, a Republican from Tennessee, said in a joint statement Tuesday. “We held months of overwhelmingly bipartisan hearings, collaborated with broad groups of stakeholders, and heard powerful stories from young people and grieving parents hurt by Big Tech’s greed. Big Tech has once again exerted its insidious influence through powerful armies of lobbyists and deceptive promotion campaigns, setting back essential efforts to protect kids and consumers. It has succeeded in obstructing reforms to make kids safer online and to ensure a fair marketplace for app consumers.”

Also: U.S. laws protecting kids online languish behind Europe

The absence of online protections for young children and teens — considered the surest bet among the tech bills to make it into the omnibus package — particularly stung for both lawmakers and policy wonks.

“Common Sense Media is disappointed that Congress is finishing the year without taking any action to establish needed online protections for kids and teens and their families,” the nonprofit’s CEO, James Steyer, said in a statement. “With a national youth mental-health crisis, and the role that media and tech play in that crisis, Congress has failed to come to the aid of kids and teens.”

For more: Bills aim at Apple, Google and Facebook as U.S. attempts to catch up to Europe’s Big Tech push

-Jon Swartz

 

(END) Dow Jones Newswires

12-24-22 0928ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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