Big Tech tries to soften the blow of Europe’s looming crackdown

Geese, a top negotiator in ongoing talks to regulate Big Tech in the EU, told Fortune this week that she’s been asked to dinner by Nick Clegg, Facebook parent company Meta’s vice president of global affairs; approached at her Brussels office by Karan Bhatia, Google’s vice president of government affairs and public policy; and subjected to other “extremely intense” lobbying efforts.

The pressure campaign isn’t working on Geese—she called last month for regulating “the whole system and the business model” of social media in a joint statement with the parliament’s lead negotiator on reforms—but it reflects the massive stakes in Europe.

EU and British lawmakers are in the home stretch of their years-long effort to rein in the likes of Facebook, Google and Twitter, threatening to punish the companies with billions of dollars in fines and cut into their consumer-driven profits. The endeavor received a galvanizing push in recent weeks following numerous damaging disclosures by Facebook whistleblower Frances Haugen, who addressed European Union leaders Monday and France’s National Assembly on Wednesday.

At a minimum, Big Tech outfits likely will have to lift the hood on key algorithms and face deeper oversight from European regulators. But with the ink not yet dry on any final regulations–British lawmakers are expected to vote on their Online Safety Bill by year’s end, while EU’s parliament aims to wrap up its work next year–it’s worth noting just how much remains unclear just how much will change across the pond.

Take a key portion of the UK’s bill: a requirement that tech companies police the spread of legal but harmful content or risk billions of dollars in fines. How will British officials define what’s harmful? How feasible is this regulation across tens of millions of users? How much will automated efforts to weed out harmful speech—already proven to be minimally effective at Facebook, per Haugen’s disclosures—satisfy regulators?

The EU’s proposed Digital Services Act and Digital Markets Act don’t carry such a nebulous mandate, but they remain mired in some legislative squabbling. For example, lawmakers remain split over a potential ban on targeted advertising, which Haugen did not back Monday to the dismay of the provision’s advocates. About 80% of Alphabet’s revenue in 2020, or $146.9 billion, came from Google and YouTube ads.

These details carry huge implications both abroad and domestically. While American lawmakers have tended to favor market-based approaches rather than heavier-handed government regulations preferred by Europeans, the EU’s work could deliver important lessons about what works and what doesn’t. As Politico Europe chief technology correspondent Mark Scott estimated, Europe’s planning for online content regulation is “at least five years ahead of what’s going on in the U.S.” 

So until that ink turns permanent in the EU and United Kingdom, the full-court press on Geese and her colleagues remains in effect.

Jacob Carpenter
jacob.carpenter@consultant.fortune.com

NEWSWORTHY

A Meta change amid the firestorm. Advertisers using Facebook, Instagram and other Meta-owned platforms will no longer be able to target people with ads based on their interactions with content related to thousands of topics—including major ones like race, ethnicity, political affiliation and sexual orientation, the New York Times reports. Meta, the newly created parent of Facebook, said the reforms, made as the company faces an avalanche of damaging whistleblower disclosures, followed expert testimony that this type of targeting “could be used in ways that lead to negative experiences for people in underrepresented groups.” However, Meta will still allow targeting based on users’ personal attributes.

Google takes another legal hit in Europe. One of the European Union’s highest appeals courts upheld a $2.7 billion fine levied against Google for the company’s practice of directing shoppers to its own shopping platform at the expense of competitors, the Associated Press reports. EU regulators issued the fine as part of a sprawling antitrust crackdown by the bloc, which has handed down $9.5 billion in penalties against Google in recent years. Google officials, who made changes to their online shopping search engines in 2017 following the fine, could still appeal to the EU’s highest court.

Federal judge to Apple: stop dilly dallying. Apple’s attempt to delay court-ordered changes to its App Store payment protocols gained no favor Tuesday from U.S. District Court Judge Yvonne Gonzales Rogers, who ordered the company to stick to a December deadline for the changes, Bloomberg reported. Apple must let developers direct customers to payment methods outside of the App Store’s realm, a shift the company fought as part of its largely successful court battle against Epic Games. Apple, which plans to appeal Gonzales Rogers’ order, argued the mandate should be stayed until an appellate court ruled on the merits of the overarching case. Epic’s CEO has warned the litigation could drag on for years.

Rivian hits the road with a big IPO. The Amazon-backed Rivian Automotive priced its IPO at $78 per share ahead of a Wednesday debut on the Nasdaq. The larger-than-expected figure puts the electric vehicle manufacturer’s market value in the neighborhood of $70 billion, nearly on par with Ford and General Motors, CNBC reported. While Rivian doesn’t expect to fill its first batch of orders until 2023, the company’s tantalizing growth model and big-name supporters have investors wondering whether it’s the next Tesla.

FOOD FOR THOUGHT

Facebook and Twitter, please, but hold the algorithms. As European lawmakers seek greater access to social media giants’ algorithms as a way to stem online abuse and disinformation, some high-profile members of Congress are charting a different course. Axios reports that a bipartisan group of lawmakers is finalizing proposed legislation that would force large social media companies to offer customers an option to opt out of algorithms that choose their content based on users’ personal information. Any bill likely faces long odds in 2021, but the involvement of several lawmakers who have shepherded notable antitrust legislation raises the stakes for Silicon Valley.

From the article:

Why it matters: The bill shows that anger over how platforms use their algorithms to target users with specialized content is a bipartisan issue with momentum on Capitol Hill.

• The algorithms that personalize content on social networks and other apps can make services addictive, violate users' privacy and promote extremism, critics and many lawmakers argue. Conservatives have also claimed that services deliberately censor their speech.

What's happening: The Filter Bubble Transparency Act would require internet platforms to let people use a version of their services where content is not selected by "opaque algorithms" driven by personal data. It's sponsored by Reps. Ken Buck (R-Colo.), David Cicilline (D-R.I.), Lori Trahan (D-Mass.) and Burgess Owens (R-Utah).

IN CASE YOU MISSED IT

Tesla has lost more than $200 billion in market value since Elon Musk’s Twitter poll—costing him 15% of his fortune so far, by David Meyer

Bumble reaches majority female C-suite with the hire of a new chief people officer, by Emma Hinchliffe

How Spotify and Amazon are using A.I. to learn your preferences—and even read your mood, by Dan Catchpole

From obscurity to superhero: Chief supply chain officer is now the toughest job in the C-suite, by Phil Wahba

Instacart CEO Fidji Simo on how she found her own leadership groove, by Maria Aspan

Fighting bias in A.I. means acknowledging it exists, by Dan Reilly

AMC may create its own cryptocurrency and NFTs in a nod to its ‘meme’ stock investors, by Brian Eckhouse and Bloomberg

Robinhood says it might not need coins like Shiba Inu on its platform, by Grady McGregor

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BEFORE YOU GO

The Duke in the coal mine. Silicon Valley and the federal government may have been caught flat-footed by the Jan. 6 Capitol riots, but one big name says he saw it coming: Prince Harry. None other than the Duke of Sussex declared during Tuesday’s RE:WIRED conference that he emailed Twitter CEO Jack Dorsey prior to Jan. 6, purportedly warning him that “his platform was allowing a coup to be staged.” Harry hasn’t produced such an email yet, and Twitter declined to comment. Perhaps it’s Monday Morning Royalbacking, but if that’s the case, shouldn’t he have, you know, said something publicly about it at the time?