New legislation has passed through the European Union parliament, aiming to put an end to the data monopolies enjoyed by the big tech companies. The dominance of Amazon, Meta (Facebook) and Alphabet (Google) in their respective areas of business have given these companies a privileged position. They have used their influence to supress competition and entry for smaller companies into the market, with governments powerless to control them, until now.
Historically, we know that even the biggest companies rarely survive at the top for longer than 30 years. For the companies born out of the Web 2.0 changes in 2002, that time is now approaching. This legislation is the latest in a series of attempts to reign in these monopolies and their gate keeping strategies, but this one might just be the intervention that works.
What is the EU Digital Markets Act?
The European Digital Markets Act is one of a number of similar legislative proposals being introduced around the globe right now. In the US several similar bills are up for debate in the two houses and other nations are likely to follow. The law has passed in Europe and is likely to come into effect next year.
The EU laws will not restrict the activities of most companies – only a very precision-targeted handful of Big Tech rulers, but we may all benefit. The legislation bans ‘gatekeeper’ approaches to keep competitors out through requirements for interoperable data. To be affected by the new law, organisations must provide a browser service (or any search functionality) and a social media service (reviews, comments, sharing and recommending etc.) and have at least 45million monthly users in the EU and 10million business users. In other words, companies Facebook and Google.
Interoperability, the key to unlocking innovation
The requirement that data be interoperable was enshrined in GDPR in 2018 under the right to data portability, but unlike the laws on data privacy, there has been very little action to enforce this right until now.
Interoperable data means that a standardised format for the data must be used by all operators and that the schema for this data be shared with relevant parties. In doing so, it makes it cheap and easy to transfer data from one independently run system to another. In real terms, what this means is that in the future, you will be able to write a message in Facebook Messenger and then send it to someone using Whatsapp or any other messaging service.
The hope is that this will open up the market for smaller services providers to emerge, as laws in the UK on data interoperability in banking created a hotbed of innovation in finance. At the moment, the fact that you and your friends or contacts all have to agree to use the same closed loop system means that there is very little motivation to shift to a better service with lower numbers. Most of us just choose to go along with what all our friends are using, rather than choosing on the merits of the service.
This is not the first attempt by governments to bring Big Tech companies back under national legal jurisdictional control and probably won’t be the last. It does mark a new era where data portability is finally treated as a right of the individual.