Tech firms may face EU services ban if they breach rules

Suban Abdulla
·3 min read
European Union flags in front of the Berlaymont building (European commission) in Brussels, Belgium.
New draft rules would allow the EU to ban firms or part of their services in the 27 member states as an extreme option. Photo: Getty

Services provided by technology companies could be banned from the European Market if they breach EU regulation rules.

Europe’s industry chief Thierry Breton told the German weekly Welt am Sonntag about the possible ban, as the European Commission (EC) finalises rules on internet companies.

Breton, along with European Competition Commissioner Margrethe Vestager, is due to announce new draft rules known as the Digital Services Act and the Digital Markets Act on 2 December.

The rules will list the do’s and don’ts and force gatekeepers — online firms with market power — to share data with rivals and regulators and not to promote their services and products unfairly.

The new sanctions would allow the EU to ban firms or part of their services in the 27 member states as an extreme option.

But, until the draft rules are adopted European antitrust and digital regulators do not have the power to impose such bans.

“Strict rules must be enforceable,” Breton told the German paper. “For this we need the appropriate arsenal of possible measures: Impose fines, exclude companies or parts of their services from the Single Market, insist that they split up if they want to keep access to the Single Market. Or a combination of all of these.”

He also said that the measures would only apply to companies that disregard the EU’s rules, and that the toughest sanctions would only be used in exceptional circumstances.

READ MORE: EU will watch Biden's biggest battleground — Big Tech

It comes after industry bodies and critics of US tech giants criticised the bloc’s ruling against Alphabet unit Google (GOOG), saying the EU did not curb Google’s alleged anti-competition practices.

Some critics want the region to go further than ordering US Big Tech to stop anti-competitive behaviour.

Over the last year, US president Donald Trump and his administration have hit out at plans from multiple EU countries to impose a digital sales tax due to how many massive US corporations would be stung by such a levy.

Europe and Britain have long been pushing for a global digital tax on tech firms — which has recently been shelved after Trump threatened retaliatory tariffs on products from British car exports to French cheese.

A report last year accused six US tech firms — Amazon, Facebook (FB), Google, Netflix (NFLX), Apple (AAPL) and Microsoft (MSFT) — of “aggressively avoiding” $100bn (£76bn) of global tax over the past 10 years by moving sales and profits through low-tax countries such as Bermuda, Ireland, Luxembourg, and the Netherlands.

READ MORE: EU accuses Amazon of warping competition on its marketplace

Last week, the EU’s top competition watchdog concluded that Amazon (AMZN) is unfairly warping the online retail market by collecting private data on independent sellers that use its platform and then using the data against them.

The EC said in a statement it had informed Amazon of its “preliminary view” that the online giant was “distorting competition” through the use of data on its Marketplace platform.

If the preliminary findings are confirmed by a full investigation, Amazon would be in breach of EU competition law. The findings relate to Amazon's business practices in France and Germany. In August, Germany’s federal cartel office opened a similar investigation of its own.

The EC has also opened a second probe into Amazon on last week, investigating whether it unfairly gives preferential treatment to sellers that use its logistics and delivery services.

EU worries that Amazon may be influenced by these factors when awarding the “Buy Box,” a preferential listing status that appears at the top of searches. The watchdog is concerned that sellers who don’t use Amazon’s logistics and delivery services are also being unfairly shut out of Amazon Prime.

Watch: Amazon, Broadcom face new antitrust probes in Europe