The European Union is seeking to expand its disciplinary powers against U.S. tech giants in a move that could grant the intergovernmental union the power to go as far as kicking tech giants out of member states entirely.
Speaking to the Financial Times on Sunday, European Union Commissioner Thierry Breton said that the European Union was seeking to expand its powers to combat the considerable influence of U.S. tech giants in Europe. Breton mentioned that the proposed powers were fairly far-reaching, up to and including expulsion from the European Single Market altogether. A rating system was also suggested that would allow the E.U. to rate the behavior of companies across several fields, including tax compliance and content moderation.
"There is a feeling from end-users of these platforms that they are too big to care," Breton told the Financial Times. "[Under] certain conditions, we may also have the power to impose structural separation."
Breton compared the state of tech giants in Europe to big banks in the lead-up to the 2008 recession and stated that regulators needed to take more decisive steps against tech giants.
"It's like for small banks and big banks you don't have the same rules - you have more flexibility for the smaller players and of course when you become a systemic [bank] you have a [different] set of rules," Breton added.
The legislation will include a "blacklist" of activities that will become illegal in the E.U., which tech giants will then be forced to cease if they wish to avoid penalties. According to Breton, penalties will scale as companies continue to be non-compliant. Penalties will start relatively small and will worsen as companies refuse to follow E.U. mandate, likely ending with expulsion from the single market.
Other penalties include being forced to sell off European divisions. This penalty, in particular, parallels the punishment that Bytedance was faced with in the United States; the Chinese social media firm was forced to either sell off its American assets for the massively popular TikTok app or face a total ban in the American market. A partnership was later established with Oracle (NYSE: ORCL), though the specifics of how this partnership will work are still unclear. It is possible that any mandatory sales of European assets may work similarly, requiring either a partnership with a European firm or the sale of all assets.
The European Union is no stranger to taking a firm stance on antitrust and anti-competition issues, especially against U.S. companies, which have consistently run into trouble with the European regulators. The European Union was stated by LVMH (OTC: LVMUY) to have been a driving force behind its decision to call off its purchase of American luxury goods company Tiffany (NYSE: TIF). Italian regulators recently announced that a wide-reaching investigation was being launched into the practices of several prominent cloud service providers, including Google (NASDAQ: GOOGL), Dropbox (NASDAQ: DBX), and Apple (NASDAQ: APPL). The investigation was in response to complaints about how the companies conducted business and over potentially misleading terms and conditions. Several months ago, a German court ruled against an appeal by Facebook (NASDAQ: FB), finding that the company's practices violated German antitrust law.