UK and EU unveil new rules to regulate big tech

The proposals are expected to create a 'level playing field' for everyone

The European Commission has introduced two legislative proposals as part of a major policy to overhaul the digital space and regulate big technology firms - at the same time as the UK introduced its own Online Harms Bill for the same purpose.

Under the new UK laws, regulator Ofcom will gain the power to block access to online services that fail to protect users - and will be able to fine them up to 10 per cent of their annual turnover (or £18 million, whichever is higher) if they fail to comply. That is higher than the 6 per cent in the EU's Digital Services Act (DSA).

However, behind that 10 per cent figure the UK laws are a softer touch than expected. For example, a separate-but-related paper cites the use of 'transparency reports' - essentially allowing tech giants to self-assess the impact of their own regulatory measures. When the European Commission reviewed such reports from companies including Facebook, Google and Twitter last year, it found them to provide 'little insight' on the actual effectiveness of such measures.

Policy experts have recommended using independent evaluators to address these issues, but the UK's approach falls well short of this. However, Ofcom will be given the power to use outside experts when it comes to other areas, specifically on the technical side. This is important to ensure that evaluators understand what tech giants are telling them and how their systems actually function.

But, the paper doesn't require tech companies to provide evaluators with access to and an explanation of their algorithms - the fuel that drives everything they do. While these systems do have huge commercial value, blocking them from the view of regulators - who have long had systems in place to learn sensitive information without disclosing it - means that a full evaluation is impossible.

The report isn't toothless, though, and there are points to be celebrated. These include moving from requiring tech companies to regulate content directly to instead regulating the systems behind it. Such an approach would be built around a statutory duty of care, which Ofcom would enforce. The regulator could make decisions based on how tech companies address the risk of harmful content being published, rather than slapping them with fines if one piece makes it through.

While the proposals do allow Ofcom to review misinformation, they don't mention online fraud, and step back from the possibility of jail time for executices. Secretary of State Oliver Dowden said criminal sanctions for senior managers could be added if required changes do not come about.

The new laws may not take effect until 2022.

Across the channel

Meanwhile, the EU proposals - the Digital Services Act and the Digital Markets Act (DMA) - will apply on all digital services, including online market places, social media and other online platforms operating in the EU.

The European Commission says the main aim of introducing the rules is to "better protect consumers and their fundamental rights online". It expects the regulations to create a level playing field for everyone and lead to 'fairer and more open' digital markets in the region.

The draft regulations propose to impose financial penalties on tech firms - up to 6 per cent (in the DSA) and 10 per cent (in the DMA) of the firm's global annual turnover - if they refuse to abide by the rules. Companies who are found to be repeatedly engaging in anti-competitive behaviour and violating rules could be made to divest certain businesses, if no other viable alternative is available to ensure compliance.

The DSA will put new due diligence responsibilities on digital platforms to quickly remove illegal content and to explain what measures were taken and why, while also offering users an option to complain.

The EU rules, unlike the Online Harms Bill, also focus on algorithmic transparency - meaning that big tech firms will have to explain how they generate rankings and hierarchies, for example, while recommending products to users.

The Council of Ministers and the European Parliament will vote on the proposals soon. If they pass into law in their current form, they would be among the toughest regulations across the world on tech giants such as Google, Amazon, and Facebook.

Margrethe Vestager, Executive Vice-President for a Europe fit for the Digital Age, commented: "The two proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online."

Commissioner for Internal Market Thierry Breton said: "With harmonised rules, ex ante obligations, better oversight, speedy enforcement, and deterrent sanctions, we will ensure that anyone offering and using digital services in Europe benefits from security, trust, innovation and business opportunities."

The USA moves in

The unveiling of the UK and EU proposals comes just one day after the US Federal Trade Commission (FTC) announced that it had issued orders to nine social media and video streaming services, seeking information about how they collect and use personal data from their users.

The affected companies are Amazon, Facebook, WhatsApp, Reddit, Snap, Twitter, YouTube, ByteDance and Discord.

The Commission said that it is specifically seeking information on how social media platforms and video streaming services collect, use, track or derive consumers' personal and demographic details; how they determine the ads to be shown to users; and how their data practices affect young, underage users.

The FTC filed a lawsuit against Facebook last week, accusing the company of abusing its market dominance to unlawfully maintain a monopoly in personal social networking services. The lawsuit alleged that the social media company bought WhatsApp and Instagram with intent to crush competition, in place of creating their own services to compete against them.

It also presented internal emails of senior executives, revealing how they perceived WhatsApp and Instagram as threats before Facebook acquired the networking platforms.