Forced to change: Tech giants bow to global onslaught of regulations

By Thursday, Google will have changed how it displays certain search results. Microsoft will no longer force Windows customers to use its Bing internet search tool. And Apple will give iPhone and iPad users access to rival app stores and payment systems for the first time.

The tech giants have been preparing ahead of a Wednesday deadline to comply with a new European Union law intended to increase competition in the digital economy. The law, called the Digital Markets Act, requires the biggest tech companies to overhaul how some of their products work so smaller rivals can gain more access to their users.

“This is a turning point,” said Margrethe Vestager, the European Commission executive vice president in Brussels, who spent much of the past decade battling with tech giants. “Self-regulation is over.”

For decades, Apple, Amazon, Google, Microsoft and Meta barreled forward with few rules and limits. Now that global tipping point for reining in the largest tech companies has finally tipped. The firms have been forced to alter the everyday technology they offer, including devices and features of their social media services, which have been especially noticeable to users in Europe.

The degree of change is evident at Apple. While the Silicon Valley company once offered its App Store as a unified marketplace around the world, it now has different rules for App Store developers in South Korea, EU and the US because of new laws and court rulings. In Europe, Instagram, TikTok and Snapchat users under the age of 18 no longer see ads based on their personal data, the result of a 2022 law called the Digital Services Act. Elsewhere in the world, young people still see such ads on those platforms. The tech industry is essentially maturing and becoming more like banking, automobiles and health care, with companies tailoring their products and services to local laws and regulations, said Greg Taylor, an Oxford University professor focused on competition in technology markets. “This represents a sea change in how we regulate the tech sector,” he said. Even, Policymakers behind some of the new rules said it was unrealistic to assume the new laws and regulations would immediately dislodge dominant companies like Google or Apple. Andreas Schwab, a member of the European Parliament who helped write the Digital Markets Act, said the hope was that over time, the rules, if strongly enforced, would provide space for new entrants to emerge and grow. “The tipping point will be reached when we have more competition and not just a change of some products,” said Mr. Schwab, who traveled to Brazil, Japan, South Korea and Singapore over the past year to discuss the European Union’s new tech rules.

Few laws have forced the firms to make as many adjustments as the Digital Markets Act. The EU law was passed in 2022 to bar the biggest tech companies from using their interlocking services and deep pockets to box in users and squash rivals. Violators could face penalties of up to 20 per cent of their global revenue.

For more than a year, tech firms have negotiated with EU regulators about changes to their products, services and businesses to come into compliance. In January, Google said it would reduce the visibility of its own services in search results and link more to rivals on queries for things like flights and restaurants. Apple said it that in addition to the change allowing rival app stores and payment services, customers in Europe with a new iPhone would see a screen to select a default browser instead of the iPhone’s automatically defaulting to Apple’s browser, Safari.

Europe’s approach is increasingly being emulated abroad. In Australia, a 2021 law required companies like Alphabet and Meta to pay the media outlets for distributing news articles on its sites, leading to an estimated $100 million in deals. In Indonesia, TikTok closed its online shopping service last year after the country banned e-commerce transactions on social media platforms. Nepal banned TikTok altogether last year. India banned the app in 2020. The Supreme Court heard arguments last month over whether Texas and Florida could legally bar sites like Facebook and TikTok from taking down certain political content. If the states prevail, it will upend how online platforms can set the terms of engaging on their sites without US government interference.

Nu Wexler, a former employee in the Washington offices of Google, Meta and Twitter, which has been renamed X, said the tech firms were “making more concessions” and “are being more pragmatic.” They just “aren’t as invincible as they were five years ago,” he said.