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Tech Titans Could Face Breakup Under EU Digital Rules

European regulators take an aggressive stance with U.S. tech giants.
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The European Union on Tuesday unveiled a draft set of digital rules that would give regulators broad powers over U.S. tech giants and could force violators to sell businesses and pay billion-dollar fines.

The Digital Services Act would put new requirements on social media companies to remove illegal and harmful content from their platforms, while the Digital Markets Act would subject so-called gatekeeper companies to a list regulations in order to prevent unfair competition.

The rules could have a major impact on tech giants like Apple  (AAPL) - Get Apple Inc. Report, Amazon  (AMZN) - Get, Inc. Report, Facebook  (FB) - Get Meta Platforms Inc. Class A Report and Alphabet's Google  (GOOGL) - Get Alphabet Inc. Class A Report.

Companies will have to permit users to uninstall apps that have originally come with their device. Performance metrics also will have to be shared for free with advertisers and publishers.

Companies that violate competition regulations would face fines of up to 10% of global revenue, and could be forced to sell parts of their business if they continue to break the rules.

"The Digital Services Act is a comprehensive set of new rules, which regulate the responsibilities of digital services," the European Commission, the executive arm of the EU, said on its website. "Together with the Digital Markets Act, it will create a safer digital space for users of digital services, protecting their fundamental rights online."

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The acts, the commission said "will also create a level playing field so that digital businesses can grow within the single market and compete globally."

The two pieces of legislation will have to be approved by European governments and lawmakers.

“The two proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online," Margrethe Vestager, European commissioner helping to lead the agency's digital reform efforts, said in a statement.

Governments around the world have been stepping up their enforcement efforts on big tech companies. 

The U.K. announced that tech giants could be fined up to £18 million ($24 million), or 10% of their annual global turnover, whichever is highest, if they don’t take down illegal content quickly, according to CNBC.

The Federal Trade Commission and most states recently filed an antitrust lawsuit against Facebook charging that the company engaged in anticompetitive behavior to maintain a monopoly position in personal social networking.