EU's Digital Market Act Clears Hurdle, Would Set Restrictions on Social Media Platforms

The European Parliament Committee on Internal Market and Consumer Protection (IMCO) has approved the Digital Markets Act (DMA) to put more stringent rules about big social media platforms in place.

The new rules would require social media companies, or any platform with more than 45 million monthly end users, to answer more for unfair business practices.

In addition, data collection of minors would be curbed, and using data for “commercial purposes” wouldn’t be allowed – commercial purposes meaning anything to do with targeted marketing and personalized or “micro-targeted” advertising.

In addition, the DMA would bolster surveillance on big platforms with what have been deemed “unfair terms and conditions” that lead to unfair competition.

The IMCO voted in favor of the DMA by a large margin, 42 to 2.

With its passing, several large tech companies might already be in violation of the DMA, including Facebook, Instagram and Twitter, if they don’t inform users about the collection of some types of data.

The report says the DMA, if adopted as it’s currently written, could be used so that companies not complying will face fines of around 4% to 20% of their worldwide revenues within the next financial year.

In addition, members of the European Parliament plan to introduce a “European High-Level Group of Digital Regulators” to coordinate DMA enforcement and make sure regulatory power is more with the government than with private companies. And the EU Parliament plans to negotiate terms and vote on the DMA next month.

PYMNTS writes that the big tech firms have been having a tough go of it because of the EU’s focus on reducing anticompetitive behavior through new fines and regulations.

Read more: Big Tech Firms Reset After New EU Regulations; Microsoft Has Its Eyes on Sweden

One of the new plans would work to limit the power that those companies have in the digital economy – designed for companies that have a market cap of at least $90.7 billion, and which offer at least one internet service.

And lawmakers have cracked down on targeted advertising – a major source of funds for Facebook and Google.