A package of new EU laws will include measures to force big tech companies to break up their businesses if they repeatedly break competition rules, according to leaked details of the plans.
The new Digital Markets Act takes aim at anti-competitive practices in the tech industry, and will include fines of 10 per cent of global revenues if tech companies deliberately break the new laws.
Meanwhile, the Digital Services Act will force companies such as Facebook to take more responsibility for illegal content on their platforms, such as scams, terrorist content or images of abuse.
Fines of up to 6 per cent of global revenue will face businesses that fail to adequately police content.
The two packages of legislation are set to be unveiled on Wednesday, and are the first major overhaul of the bloc’s internet regulation in 20 years, since the now outdated e-Commerce Directive from the year 2000.
The laws take aim at what the European Commission dubs "gatekeepers": big tech companies that dominate the market to the extent that the regulators are concerned they have such extensive access to data that they can stifle any potential competition.
It's the latest challenge to the dominance of big tech, led by internal markets Commissioner Thierry Breton and competition and tech chief Margrethe Vestager.
If investigators find that tech companies are systematically breaking rules to entrench their own position, the EU can impose “behavioural or structural remedies” to force them to comply with the law, according to leaked details.
Big tech companies that are fined three times within five years for infringements would be labelled as repeat offenders, and the European Commission will move to structurally separate their businesses, two people with knowledge of the plans told the Financial Times.
The proposals require the approval of member state governments and the European Parliament in order to be adopted, a process that can take several years and will likely involve revisions to the plans.
The European Commission believes it must move quickly to set down new regulations for the internet, in a bid to use the economic heft of the EU to establish global standards before China or the US do so.
The proposals are likely to receive sharp scrutiny in Dublin, where there is concern at hardened positions in Brussels and many member states towards the regulation and taxation of US multinationals like Amazon, Apple, Facebook, and Google, many of which are headquartered in Ireland.
France lost patience with attempts to agree a common EU digital tax and this year imposed its own, risking the ire of the US.
Hopes are pinned on the incoming administration of Joe Biden to reignite OECD discussions on a global digital tax, which Ireland insists must take precedence to an EU-only levy to avoid multinationals relocating out of the bloc.
Also on Tuesday the UK proposed laws that would see Facebook, Twitter and Chinese-owned TikTok face fines of up to 10 per cent of turnover if they fail to remove and limit the spread of illegal content .
Tech platforms will also need to do more to protect children from being exposed to grooming, bullying and pornography, the UK government said, to ensure the safety of children online. “We are entering a new age of accountability for tech to protect children and vulnerable users, to restore trust in this industry, and to enshrine in law safeguards for free speech,” Britain’s digital secretary Oliver Dowden said.