One of the world's most far-reaching laws to address the power of the biggest tech companies was expected to be finalized this week by the European Union.
The Digital Markets Act would be the most sweeping piece of digital policy since the bloc enacted the world's toughest rules to protect people's online data. The legislation aims to stop the largest tech platforms from using their interlocking services and resources to squash emerging rivals, creating room for new entrants and fostering more competition.
It means that companies like Google can't collect data from different services to offer targeted ads without users' consent, and that Apple might have to allow alternatives to its App Store on iPhones and iPads. The law will likely take effect early next year and violators could be fined a lot.
The Digital Markets Act is part of the European regulatory onslaught. The European Union is expected to reach an agreement on a new law that will force social media companies such as Meta, the owner of Facebook, to police their platforms more aggressively.
Europe is cementing its leadership as the most assertive regulator of tech companies with these actions. The latest legislation raises the bar by potentially bringing the companies under a new era of oversight, just like health care, transportation and banking industries.
Europe has put its foot down because of the behavior of big online platforms, said one of the top digital officials in the European Commission. A new framework can become a reference for democracies.
Representatives from the European Parliament and European Council were working behind closed doors to reach a final deal. After 16 months of talks, their agreement would come after a vote by parliament and representatives from the 27 countries in the union. After this week's deal is struck, that final approval is viewed as a formality.
Europe's moves are different from the lack of activity in the United States. Republicans and Democrats have held several high-profile congressional hearings to scrutinize Meta, but no new federal laws have been passed to address what many see as the tech companies.
Europe's new rules could offer a glimpse of things to come elsewhere in the world. The General Data Protection Regulation, which restricts online collection and sharing of personal data, has served as a model for other countries.
The Digital Markets Act faced obstacles. Policymakers dealt with what watchdogs said was one of the most intense lobbying efforts they had ever seen. The rules were brushed aside because of the Biden administration's concerns.
There are still questions about how the new law will work. Companies are expected to look for ways to diminish the impact of the law. At a time when budgets are under strain from the Pandemic, regulators will need new funding to expand their oversight responsibilities.
The pressure will be intense to show results and fast, said Thomas Vinje, a veteran antitrust attorney.
The Digital Markets Act is expected to apply to platforms that have a market value of more than 75 billion euros, which includes companies like Amazon, Apple, Microsoft and Meta.
Rivals of the biggest companies have a wish list of the law.
It would be necessary for Apple and Google to loosen their grip on the operating systems that run on nearly every phone. Alternative app stores are likely to be allowed for the first time by Apple. It is expected that the law will allow companies to use alternative payment methods, such as the one Apple uses in the App Store, which charges a 30 percent commission.
In response to a previous E.U. antitrust judgment, the company has already given customers options to use other email and search services on their phones in Europe. On Wednesday, the company announced that it would allow alternative payment methods to be used in its app store.
Amazon is expected to be barred from using data collected from outside sellers on its services so that it could offer competing products, a practice that is the subject of an antitrust investigation. Data about competitors could not be collected by Meta.
Major changes for messaging apps are possible due to the law. It's possible that users of rival services like Telegram and Signal could send and receive messages to one another using the popular messaging service. Rival services can make their products compatible with the popular messaging service.
The largest sellers of online advertising would likely be limited from offering targeted ads. It's lucrative for both companies to offer ads based on data collected from people as they move between platforms.
Policymakers were considering including a provision that would allow publishers in Europe to negotiate new compensation with Meta for their articles posted on their platforms. News organizations in Australia had to stop posting articles on Facebook because of the issue.
Neither Amazon nor Meta would comment. Requests for comment were not immediately responded to by the three companies.
European rules can become global standards because it is easier for companies to apply them across their entire organization, according to a Columbia University law professor.
Everyone is watching the Digital Markets Act, be it the leading tech companies, their rivals, or foreign governments.
President Biden has appointed a critic of Amazon to lead the Federal Trade Commission, and a lawyer critical of the tech giants to head the antitrust division of the Department of Justice.
Efforts to change American antitrust laws have been slow. The tech platforms would not be allowed to buy smaller companies under the bills approved by the committees. It's not clear if the measures have the support to pass the full House and Senate.
The new law requires European regulators to enforce it. The lack of enforcement has been criticized.
The European Commission will have to hire many new employees to investigate tech companies. As a result of the new law, companies are expected to mount court challenges of future penalties.
Mr. Vinje, the Brussels antitrust lawyer, said that they will not be completely without defenses.
David was reporting from Washington.
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