EU to Curb Big Tech's Self-Preferencing & Data Use
Legislators in Europe are concentrating on the capacity of major technology companies to prioritize their own offerings within search results, potentially disadvantaging competitors, as Commission Executive Vice President Margrethe Vestager has affirmed that upcoming legislative proposals, expected in the coming weeks, will seek to prohibit what she termed “unfair self-preferencing.”
The central issue is that platforms acting as gatekeepers possess the ability to influence how different businesses are ranked—and “promote their own services more prominently than those of their competitors,” she stated during a public address.
The Commission anticipates presenting a series of legislative actions next month to modernize existing EU e-commerce regulations and introduce new restrictions for platforms holding substantial market influence (commonly known as gatekeepers)—fulfilling an earlier commitment to revitalize digital regulation.
During her address to the EPC Digital Clearinghouse today, Vestager verified that the Digital Services Act (DSA) and Digital Markets Act (DMA) will be formally introduced within a matter of weeks.
The Commission is strategically timing these announcements, coinciding with growing public and political dissatisfaction with large technology firms and the recent antitrust lawsuit filed by the U.S. Department of Justice against Google, although the EU executive’s proposals for revising digital rules have been under development for several years.
Vestager explained that the DSA will modernize the current E-Commerce Directive—by mandating that digital services “assume greater accountability for addressing unlawful content and hazardous products,” including by establishing standardized procedures for reporting illegal content and handling content reports and complaints.
“These new responsibilities will contribute to maintaining the same level of safety for Europeans online as they experience in the physical world. They will safeguard legitimate businesses, which adhere to regulations, from being undermined by those offering inexpensive, dangerous products. And by implementing consistent standards throughout Europe, they will ensure that all Europeans can rely on the same protections—and that digital businesses of all sizes can operate seamlessly across Europe, without incurring the costs of complying with varying rules in different EU nations,” Vestager elaborated.
She also confirmed that the package will include enhanced transparency requirements—relating to content removal and recommendations, as well as disclosures for online advertisements, detailing both the advertiser and “the reasons why a particular ad was targeted to us.”
According to Vestager, the DMA proposal will consist of two main elements: a “definitive list of requirements and prohibitions” for “large digital gatekeepers,” which she stated “will be informed by our understanding of behaviors that can hinder effective market function”; and a “unified market investigation framework” applicable across the EU’s single market—granting the executive branch the authority to proactively intervene in digital markets to address structural issues before they become deeply rooted and result in entrenched internet monopolies.
Recent reports suggest that the forthcoming list of requirements and prohibitions for major technology companies may be extensive—although the precise details are yet to be finalized.
However, a prohibition on certain types of self-preferencing will undoubtedly be included.
Google’s practice of prioritizing its own services in search results has been under scrutiny by the European Commission’s antitrust authorities for years—culminating in a multi-year investigation into its Shopping search comparison service, which resulted in a $2.7 billion fine in 2017 and an order for Google to cease abusive self-preferencing. Despite this action, competing price comparison services have continued to express concerns that Google is not competing fairly, prompting the Commission to determine that further action is necessary.
Vestager also confirmed another restriction affecting major dual marketplaces—which are poised to face future EU regulations regarding their use of data from third-party sellers. She contended that the imbalance of platforms having access to seller data while simultaneously competing against those third parties in other markets “can significantly compromise fairness”—stating that the proposal “seeks to prevent large gatekeepers from misusing their business users’ data in this manner.”
This issue has also been a long-standing concern for Vestager. For instance, last year, the Commission initiated a formal investigation into e-commerce giant Amazon’s utilization of merchant data (although this investigation is still in progress).
The third central component of the DMA involves the reform of digital competition regulations, as EU lawmakers aim to modernize the regulatory framework to keep pace with the evolving digital landscape.
“We are constantly at risk of large companies successfully driving markets to a tipping point, sending them into a rapid, irreversible decline towards monopoly—and creating yet another powerful gatekeeper,” Vestager explained, underscoring the need for a harmonized set of rules to address structural problems in digital markets throughout the EU.
The potential consequence of leaving it to EU Member States’ national competition authorities to address these issues is “a fragmented system, with differing rules across EU countries,” she continued, adding: “We have reached a point where we must take action. A point where the power of digital businesses—particularly the largest gatekeepers—threatens our freedoms, our opportunities, and even our democracy. And where the trust that successful digitization relies on is becoming seriously eroded.”
The EU’s executive branch is delivering a firm message to technology giants: “things will have to change”—with enforced accountability set to replace voluntary self-regulation.
Vestager also emphasized the Commission’s attention to how the revamped digital rules will be enforced—a crucial consideration given that a lack of consistent and robust enforcement has diminished the impact of the EU’s updated data protection framework (due to decision-making authority residing at the Member State level).
The commissioner stated that “effective enforcement” will be a vital element of the DSA package, arguing that: “To truly instill trust in the digital world, having the right rules in place is not enough. People also need to know that those rules actually work—that even the largest companies will comply with their obligations. And to ensure this happens, there is no substitute for effective enforcement.”
This entails that the package will include measures designed to enhance cooperation among national authorities—"to ensure the rules are properly enforced throughout the EU,” as she put it.
“Our proposal will not alter the fundamental principle that digital services should be regulated by their country of origin. But it will establish a permanent system of cooperation that will help those regulators work more effectively, to protect consumers across Europe. And it will empower the EU to intervene, when necessary, to enforce the rules against very large platforms,” she added.
The Commission is also relying on the DMA as its primary enforcement mechanism against the market-distorting scale of big tech—by enabling proactive intervention to foster and sustain competition.
With widespread discontent towards large technology companies prevalent across Europe, the Commission likely anticipates securing support from representatives of EU Member States on the EU Council and elected members of the European Parliament—support that will be essential to enact its legislative proposals.
