Battleground Europe: Tech Companies Feeling the Heat as Europe Flexes Regulatory Muscle

While the Tech Giants have benefited from the “light-touch” regulatory approach taken in the United States, European regulators are increasingly flexing their muscles in the area of taxation, antitrust, content moderation and privacy.  This is even before any potential retaliatory action taken in response to President Trump’s proposed tariffs on steel and threat of a trade war.

The Taxman Cometh: Charge 2-5% of Revenues

The European Union will soon release a plan to tax large global tech companies at a rate of 2-6 percent of aggregated gross revenues.  The proposal is targetted at companies such as Amazon, Facebook and Google who evade taxes by routing much of their profits through low-tax EU states such as Ireland and Luxembourg.  The new proposal would instead focus on where the revenues are generated.

Google Faces Renewed Antitrust Fines

Last year Google paid a $2.95M fine to the EU for exploiting its search monopoly to promote its online shopping service, while also introducing a proposed remedy that allowed other companies to bid against its own shopping service for prominent advertising slots.  Four months later, however, a study found that Google controls 99 percent of the positions in its search results.

Nineteen companies and organizations, including several behind the initial Google complaint, have released an open letter to Margrethe Vestager, the EU Commissioner for Competition, to reject Google’s offered remedy.

Google’s current remedy proposal has been in operation for more than four months, and the harm to competition, consumers and innovation caused by the infringement established by the Decision has continued unabated.

EC Calls for Social Media Companies to Remove Terrorist Content Within an Hour of Posting

On March 1st, the European Commission released its “Recommendation on measures to effectively tackle illegal content online,” in which is explained:

Terrorist content is most harmful in the first hours of its appearance because of its fast spreading and entails grave risks to citizens and society at large. Given this urgency, and in view of calls from EU leaders and international organisations such as the United Nations and the G7, the Recommendation puts particular emphasis on terrorist material: it should be removed within one hour after it has been flagged to the platforms by law enforcement authorities as well as Europol.

The EC says this applies to all platforms, but especially the big ones.

The Recommendation will apply to all platforms, big and small, as increasingly smaller platforms have become a soft target for illegal content online, notably for terrorist content. However, the Recommendation pays a specific attention to small platforms, by asking for proportionate measures and recognising that some platforms have only limited resources and expertise.

The Computer & Communications Industry Association has criticized this recommendation as unrealistic and that:

Such a tight time limit does not take due account of all actual constraints linked to content removal and will strongly incentivize hosting services providers to simply take down all reported content.

The EC action is separate from Germany’s recent “Facebook Law” which requires removal of hate speech within twenty-four hours of being flagged.

WhatsApp Still Has Not Provided a Plan for Sharing Data with Facebook

Messaging app WhatsApp has still not proposed any measures to address EU regulator concerns over its sharing of user data with parent company Facebook.  It announced last week that it was not sharing any EU data with Facebook until it reached an “arrangement” with the Irish Data Protection Commission.

GDPR is only 82 Days Away

On top of this, Europes sweeping General Data Protection Regulation goes into effect in 82 days.

More Information: EU eyes tax on tech giants closer to 2 percent than 6 percent of revenue: Le Maire, Reuters; Google still abusing search engine monopoly, rivals tell EU, The Telegraph; EU Gives Facebook, YouTube One Hour to Remove Terrorist Content—How Realistic Is It?  The Observer; WhatsApp Yet To Resolve EU Data Sharing Concerns, SiliconUK