EU Proposes New Law to Fine Tech Companies Up to 6 Percent of Global Revenue for Unfair Trade Practices

The Proposed Law

Technology, e-commerce, and social media companies could face fines of up to six percent of their annual global turnover for unfair digital trade practices. A European Commission draft law outlines these strict penalties for businesses that trick users into buying more or target children with personalised ads. European Commission Justice chief Michael McGrath will present the proposed legislation, named the Digital Fairness Act, on Wednesday. The law must still be discussed and agreed upon with European Union countries and the European Parliament before it takes effect.

Key Restrictions

The Digital Fairness Act aims to ban dark patterns, which are deceptive website and app designs that trick people into buying items. The Commission also plans to stop personalised advertising directed at children and vulnerable consumers. Companies that use dynamic pricing, where prices change based on real-time demand, will need to clearly state how many items are left at the advertised price. Traders must also give users an option to turn off addictive features that cause excessive use.

Public and Expert Reaction

Finance Watch, an organisation that campaigns for the public interest in financial services, stated that the new rules do not go far enough to protect online investors. Peter Norwood, a senior research and advocacy officer at Finance Watch, said the proposals on dark patterns are a step in the right direction but lack the ambition needed to truly protect consumers in financial services.

Context

This proposed law is part of a broader series of European regulations aimed at reining in large technology companies and holding digital platforms accountable for their online practices. Similar legislative efforts in the region have historically focused on user privacy, data protection, and fair market competition. Companies operating within the European Union must regularly adapt their global software designs and business models to comply with these strict regional standards.