The European Union is preparing ambitious draft legislation to counter what it sees as the dangerous monopoly position of tech giants, hinting at a brewing battle royale with Silicon Valley.

The sweeping legislation will have two parts, a Digital Services Act (DSA) and a Digital Markets Act (DMA).

These two laws will "create the rules of the road for all digital drivers across Europe," said EU Competition Commissioner Margrethe Vestager in a tweet.

With both Washington and London worrying in recent months about the strength of big tech, the EU clearly is aiming to set global standards for the digital economy.

Drafting them along with Commissioner Vestager has been the EU's internal market commissioner, Thierry Breton, who in September said "there is a feeling from end users of these platforms that they are too big to care."

Make law not war

The Digital Services Act says companies like Amazon and Google won't be able to use "data collected on the platform" for commercial activities unless they also make it "accessible to business users active in the same commercial activities."

This will make big-tech companies share the reams of data they keep on customers with smaller upstart competitors if they want to keep on using it for commercial activities themselves.

The Digital Markets Act sets up what it calls "narrowly defined objective criteria" to identify which large online platforms are the very biggest "gatekeepers".

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Then these gatekeepers, like Amazon, won't be able to rank their own services and platforms higher than offerings from other companies that also list on their platforms.

Users need to be able to remove any pre-installed software if they want to.

These two new bits of legislation "will finally complete the creation of a true digital internal market" and will be "a major step in making Europe a rules-based digital global leader," enthused Sandra Kalniete, a Latvian MEP and former foreign minister.

The laws are the first significant revamp for two decades of the EU's approach to regulating the Internet.

And they have a bite: big-tech companies will be liable for fines of up to 10% of their global revenues for breaking them.

The real punch kicks in, though, for companies that have been fined three times in five years.

If this happens, be warned: the EU will move to break up your business.

Monopoly: Brussels edition

Up two years of wrangling over details will now take place in the European Parliament and Council of Ministers.

And this will give big tech plenty of time to bring its lobbying A-game, convincing MEPs to reframe the competition issue instead in terms of free speech or innovation.

The EU is trying to get out in front of an international trend and establish itself as the gold-plated regulator other jurisdictions can follow.

It's a trick Europe has managed in data privacy with GDPR, the sweeping General Data Protection Regulation that went into force in 2018.

Meanwhile, in Washington, legislators have undertaken hearings on Capitol Hill, and 48 state attorneys general and the Federal Trade Commission went to court last week against Facebook for "illegal monopolization" and breaking US antitrust law.

And a second avalanche of US states suing Google is likely shortly to follow.

Back in the UK, Downing Street has said in April 2021 it will set up a Digital Markets Unit, which can suspend, block and reverse the decisions of tech giants.

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— Padraig Belton, contributing editor, special to Light Reading