The European Union has finalised a new law to prevent tech companies like Facebook and WhatsApp from acting arbitrarily. Things like banning active criminal activity on big technology companies and the misuse of users’ data for personal gain will be prevented as a result of this. Companies that break the law will also be fined. Which will be determined by their income. If the company continues to do so after the fine has been imposed, the fine will be increased.
Priority will be given to small messaging platform companies.
The European Union has enacted a new law to level the playing field in the technological world. The act is known as the Digital Market Act (DMA). Its goal is to keep large technologies in check while allowing smaller businesses to compete. The act focuses on the interoperability of messaging apps like WhatsApp, Facebook Messenger, and iMessage, with the European Union stating that larger companies must collaborate with smaller messaging platforms. Users will have more options for sending messages as a result of this. Users will have the option of choosing their browser and search engine for free.
Gatekeeper will be defined as an app with 45,000 active users.
The European Union will impose new obligations on companies that are considered gatekeepers as a result of this law. Firms with a market capitalization of at least $82 billion (roughly $6 trillion), as well as apps or social network platforms with at least 45,000 active users, fall into this category. It now includes well-known tech firms such as Google, Microsoft, Meta, Amazon, and Apple.
A fine of up to 20% will be imposed if the rules are not followed.
The gatekeepers will be heavily fined if they do not follow the rules. In this case, the penalty will be up to 10% of their previous year’s business, and in the case of repeated violations, the penalty will be up to 20%. The goal of the new law, according to European Union Commissioner Margrethe Vestager, is to make business in the technology sector more transparent.
Fines imposed on tech companies have had no effect so far.
DMA has been a source of contention within the European Union for the past decade. The law will make it more difficult for Amazon to profit from third-party sellers who use its platform. However, this may only affect a few businesses. For tech companies, such fines are frequently insignificant. When Apple’s App Store was fined $5.5 million per week in the Netherlands for misusing third-party data, it chose to pay the fine rather than make any changes to its platform.
Only companies based in the European Union will be subject to the Act.
This is why the Digital Market Act is being viewed as a possible solution. The amount of the fine imposed will increase if the same mistake is made again and again. If you do not make the necessary changes, the penalty will be increased. Only companies based in the European Union will be affected.