As European regulators advance legislation to curtail powerful tech giants like Google and Apple, experts worry about the impact such legislation would have on the largely U.S.-based companies and their employees.

The Digital Markets Act (DMA), proposed in 2020, establishes criteria to qualify large online platform operators as “gatekeepers.” According to the DMA proposal, gatekeepers are companies with strong economic positions in multiple countries within the European Union that link large user bases to multiple businesses.

If passed, the DMA will set rules of the road for gatekeepers, such as allowing businesses operating on their platforms to access the data they generate and allowing third parties to interoperate with the gatekeeper’s services. As the DMA is written now, it would apply mostly to the five major U.S.-based tech giants: Google, Apple, Amazon, Facebook and Microsoft.

During a recent webinar hosted by the Center for Strategic and International Studies (CSIS), a think tank based in Washington, D.C., some experts argued that the legislation is too targeted and will impede market access in Europe for U.S. tech giants, which could hurt their U.S. job growth. U.S. regulators are also grappling with how to rein in tech giants but have yet to pass any broad national legislation like the DMA, which could be passed in the EU as early as 2022.

“Many policymakers in the business community in the United States do see this as an attack on U.S. companies for being too big and too successful in Europe,” CSIS senior adviser Meredith Broadbent said.  

Assessing the DMA’s impact

Jobs is one area the DMA could impact, said Michael Mandel, vice president and chief economist at the Progressive Policy Institute.

Mandel said the e-commerce and tech sector in the U.S. has created 1.4 million jobs in the last four years and the DMA acts as a restrictive trade measure on that job-creating industry.

“The DMA would have the effect of slowing a lot of this job growth,” Mandel said.

The DMA could not only be harmful to U.S. businesses, but European businesses as well. Benedikt Blomeyer, director of EU policy at global startup network Allied for Startups, worries that there could be some unintended consequences for startup businesses that often rely on larger companies to help grow their businesses.

“Our feeling is that there are a lot of interdependencies that we don’t fully take into account with the DMA at this point,” he said. 

Broadbent argued that the DMA should be further scrutinized and revised before it is passed. The U.S. should also weigh in since the legislation would affect U.S. companies, she said, adding that the recently established US-EU Trade and Technology Council could be the place to have those discussions. However, Blomeyer said it could be politically sensitive for the U.S. to provide suggestions to the EU on how to frame the DMA, which is already far down the legislative timetable.

However, not all experts agree that the DMA’s impact will be harmful. Tyson Barker, head of technology and foreign policy at the German council on foreign relations, said the DMA isn’t looking to break up tech giants, but instead is seeking to limit the companies’ ability to favor their own products.

“It is looking to create a new relationship with regulators, it is looking to provide more choice, it is looking to unlock lock-in effects,” he said.

Also this week

  • Meta, Facebook’s parent company, announced it will be shutting down the Facebook app’s facial recognition software as part of a company-wide move limiting the use of facial recognition tools in the company’s products. According to a blog post about the decision, Jerome Pesenti, vice president of artificial intelligence, said Facebook users who have opted into the face recognition setting will no longer be automatically recognized in photos and videos. “For many years, Facebook has also given people the option to be automatically notified when they appear in photos or videos posted by others and provided recommendations for who to tag in photos,” Pesenti said in the blog. “These features are also powered by the Face Recognition system which we are shutting down.”
  • Yahoo Inc. will no longer operate in China, the company announced Tuesday. Yahoo cited an increasingly challenging legal and business environment in China as the reason for pulling its main suite of services beginning Nov. 1.

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.