The European Union on Thursday took another step in its continuous efforts to rein in American tech giants. The Council of the European Union, one of three institutions involved in the bloc’s legislative process, agreed on a common position with respect to two legislative initiatives proposed by the European Commission in December 2020: the Digital Services Act and the Digital Markets Act.
While the former sets out to hold owners of digital platforms (e.g. Meta) accountable for what happens on their platforms (“what is illegal offline should be illegal online”), the latter is designed to strengthen competition in digital markets that are currently dominated by a few companies who serve as “gatekeepers” to what the Council describes as “core platform services”. By the EU’s definition, these services include “online intermediation services (i.e. marketplaces, app stores), online search engines, social networking, cloud services, advertising services, and more.”
Going by this definition, it’s pretty clear which companies are targeted by the Digital Markets Act, namely Amazon (marketplaces, cloud services, advertising services), Alphabet (online search engines, advertising services, cloud services, app stores), Apple (cloud services, marketplaces, app stores, advertising services), Meta (social networking, advertising services) and Microsoft (cloud services).The European Union has made a name for itself in recent years for going head to head with big tech, slapping the likes of Alphabet and Apple with billion-dollar fines on more than one occasion.
As the following chart shows, the power and financial clout wielded by the five companies often summed up as Big Tech is unmatched in Europe. While Apple, Microsoft, Alphabet and Amazon have market capitalizations above or close to $2 trillion, the most valuable public company from Europe is luxury conglomerate LVMH with a market cap of $411 million. In fact, the five most valuable companies from Europe combined, including two from Switzerland which is not an EU member but part of the European Single Market, do not match the market value of either of the four companies mentioned above.