Is Big Tech the Bystander in Europe's Battle Against Online Scams?

Online scams have emerged as a persistent and daunting challenge, stripping Europeans of more than €4 billion annually. According to Tech Monitor, this alarming trend has propelled Brussels to demand increased accountability from tech giants such as Google, Apple, and Microsoft, urging them to secure the platforms that are currently vulnerable to digital fraudsters.

Brussels’ Bold Move: Shifting Accountability

Brussels’ demands mark a pivotal shift in the perception of tech companies. Historically seen as facilitators of digital access, these platforms are now being mandated to take a more active role in ensuring user safety. The European Commission insists on a duty-of-care framework, obliging corporations to anticipate risks and implement preventative measures before harm befalls users.

Nick Reese, a former US Department of Homeland Security official, describes this as a departure from the reactive “notice-and-takedown” model of the past. In his words, “Platforms must prove that they’ve anticipated risks in advance rather than reacting after the damage is done.”

Weak Links in the Digital Ecosystem

Despite existing regulations like the Digital Services Act (DSA), significant vulnerabilities persist within tech platforms’ systems. The verification of users, screening of apps, and monitoring of adverts are areas fraught with weaknesses. Authentication mechanisms are notably unreliable, unable to consistently confirm the true identity of users.

“The use of inconsistent multifactor checks means we can confirm a device or an IP address, but not the individual behind it,” Reese highlights. In financial contexts, this translates directly into tangible losses.

The Cost of Increased Accountability

The push to hold major tech companies accountable comes with its own set of challenges. Amanda Brock, CEO of OpenUK, emphasizes the growing compliance burden. While responsibility may shift towards tech giants, financial institutions and other sectors may still face increased due diligence requirements. Essentially, the cost of liability is distributed across the entire digital economy.

According to Brock: “Liability being pushed upstream won’t necessarily absolve banks and fintechs.” Increased legal, technical, and audit costs are likely side effects of these shifting responsibilities.

Regulation vs. Innovation: A Delicate Balance

As Europe enforces stricter regulations, concerns arise regarding innovation. Smaller providers could find it difficult to match the compliance capacity of larger incumbents, potentially leading to their withdrawal from the market. The complexity of regulatory measures might reinforce the dominance of existing giants, narrowing the digital landscape.

In contrast, consistent regulatory standards might bolster industry confidence. “Companies can plan to innovate within clear rules, rather than react to fragmented policies,” asserts Reese, highlighting the advantage of predictability.

Europe’s approach contrasts with the US’s state-driven policies, lacking a unified federal data or AI law. This divergence could influence global market dynamics, with Europe pushing ahead in establishing comprehensive legal frameworks such as the DSA and AI Act.

In the coming months, Europe’s digital platforms will be tested on their readiness to embrace greater compliance responsibilities. For the European Commission, the challenge lies in demonstrating that regulation and innovation can coexist within a thriving digital economy.