The EU is on the cusp of formally approving the Digital Markets Act — the landmark tech competition rules that could force drastic changes in the business models of Apple, Google and other big tech companies.
Ahead of the vote, European Parliament member Andreas Schwab, a German lawmaker who oversaw the legislation, is visiting Washington, D.C. He sat down with Protocol to explain why the public shouldn’t doubt the seriousness of U.S. lawmakers’ tech antitrust agenda, why we’re going to see even more choice screens and how seriously business leaders need to reckon with the possibility of selling off popular services.
This interview has been lightly edited for clarity.
U.S. tech policy watchers are pretty jaded. It seems like nothing ever changes on privacy or antitrust, and even when it has, the big players still come out on top. Are you optimistic that the EU is really about to change the whole tech world that we've known for the last 30 years?
The European Union has decided that we’re starting a new era of tech policy. [The DMA] will be enforced from the first of January. What are the consequences for the U.S.? I think we should be very modest as Europeans, but we have seen with data protection and cybersecurity, other countries take over what we do.
Countries like Japan, Indonesia, Australia and others are already doing some stuff, and it may well be that, sooner or later, they just take over what we have been proposing. And to that extent, then, I think there will also be very strong pressure for the United States to follow on.
When you hear from U.S. lawmakers, especially on this trip, do they say that they’re ready to act on this? The clock is really ticking in Congress. In some ways, it's down to weeks really, at this point, to pass competition legislation.
We have been speaking a lot, and I think there is absolutely room for optimism. I think the discussion in Congress is far more advanced than the public has understood. For sure, it's always difficult to fight against vested interests. But I have no doubt that the Americans are ready and willing to do the same as we did in Europe.
Let's get down to some of the details: Messaging interoperability is a major factor in the DMA. Obviously, on the other side of it are the companies and civil liberties groups concerned that privacy or end-to-end encryption is threatened when secure services have to work with insecure ones. Can you describe any work that’s going into preserving safety and privacy?
Initially, the DMA didn’t foresee any interoperability obligation. It came in in the legislative process, but the obligation is that small [holds out his thumb and index finger, almost touching them] compared to the DMA. And it's not a general interoperability obligation. It is an obligation for the [messaging] gatekeepers to allow smaller companies to connect with their services if there is a reasonable request. So if you are saying, “I'm Joe Sixpack, I want to connect with you,” they don't have to do that. If there is a fake instant-messaging company from Iran, it will have no chance. And even if you'd make a reasonable request, there is six years of process to make sure that first messaging, then pictures and other texts, are going to be exchanged in an encrypted mode. We wanted to ensure that, and therefore we have given the European Commission the power to delay that process so that standards can be worked out.
Do you think that a general interoperability mandate, let's say across social media, is plausible in some further iteration? It's something that the U.K. is looking at and some U.S. lawmakers are looking at.
In the negotiations, we were looking at that, but the likelihood for this to be done safely, at the moment, was too unclear. The market for these platforms is based on the principle that they have an income, and if you cut off the content from the advertisement, to a certain extent you destroy the platforms.
Talk about what you think the experience for consumers will be like. After GDPR went into effect, it seemed like I was being barraged by data-use options. Are there going to be more choice screens? “What browser do you want to use?” “What app payment system do you want to use?” “What messaging service?”
The aim of the DMA is to create a better variety of offers and services to users, to businesses and to consumers. And this has already been enacted in the past with specific competition policy procedures. So, the browser issue has been settled. Why should [a similar approach] not be applied to all other companies that have a gatekeeping status? If you want to have your Gmail, or your Outlook, or your iCloud? This is your choice. No platform should be able to oblige you to take one of their [services so that they can] screen your data more easily. We want people to be able to choose their browser, their search engine and so on. That choice option is a process that will be adapted over time for important tools that you use all the time in all digital systems. The Microsoft browser [case] was in the PC era. We are in the Web 2.0 era. We don't know what will come in the Web3 era.
But it does seem like choice screens are going to be a big part of how we experience the DMA?
That will be the technical element to it. It’s true that the first experience with this will be these choice screens, but I think it will be the boring part of it. The more interesting part will be the back side of the economy, where you can have better offers and a broader variety of services.
How seriously should we take the possibility that something like YouTube or Google Maps or Amazon Prime has to be spun off?
Well, I think we should take it seriously, but it should be taken more seriously by those that have the responsibility for these businesses. They have to consider the legal basis and the legal framework in which they operate.
How stringent do you think punishments and investigations will be in the first year or two?
In the first year or two, there will not be that much. The question will be: Can we come to a compliance culture? The problem is, investors want to have as much cash as possible. Only if the law is clearly stopping the purely cash-related [motivation] can we convince [the companies] to have other [motivations] in business development. That's what we want to allow for. I think it can be extremely interesting to see how these businesses respond to demands that a democratic society makes.
What are U.S. trade officials, who were unhappy that this was going through, telling you now that the DMA is essentially a done deal?
I think that there is a clear commitment on both sides of the Atlantic to make the digital economy as fair as the traditional economy. This is never perfect. What I can tell you is there are plenty of small and medium-sized companies, especially from the U.S., that are pushing us to go further because they think that they will have chances to acquire larger parts of the market if these laws are enacted quickly. They believe that the market can become better, the variety of services and products better, and therefore I think there will be a very strong [push] in the U.S. for such laws to be applied. We should not pit the American economy against the European, because in the end, we are living in an open economy.
If you're a small or medium-sized company, what should you be doing to prepare to assert your rights in Europe right now?
The problem is, very often these companies have a smart idea and an innovative service, but to a certain extent, they discover that they are broken apart by gatekeepers, by anonymous behaviors that you cannot easily prove. And what we say is: Speak out about them! Always check to what extent the data streams of gatekeepers are the precondition for your success. So if you are not in search engine results anymore, question why that’s happening. In the U.S., the streets are public. There is not one company that controls them and says to you, “You have to stay at home because you cannot do that in our streets.” But that's what happens in digital. Lots of companies have already gone down. Maybe some of them because of bad ideas, but some of them with brilliant ideas and innovation that we have lost forever. But in the future, we don't want to have that anymore. And that's the reason why we fight.
