Regulation
Published on May 26, 2021
Last update 26.05.2021

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DSA and DMA : new European Commission regulations

The European Commission has presented these two regulations with the common objective of regulating the European digital space. The old continent wishes, and this is not new, to place legal limits on the digital world and thus circumscribe the responsibility of the major players in the sector. These texts, presented on December 15, 2020 by Margaret Vestager, Vice-President of the European Commission and by Thierry Breton, Commissioner for the Internal Market, aim to be effective by early 2022.

What is the DSA – Digital Services Act ?

The DSA (Digital Services Act) is more about users as it targets the functioning of platforms and their content control processes. It is about making the browsing experience safer but also more transparent about the classification and/or possible deletion of these contents.

This regulation comes to dust off another European text, the e-commerce directive, published in June 2000. The latter had become obsolete due to its age and the fact that it was established before the emergence of those that the European Commission is careful not to name clearly in its two new texts; the GAFAM.

The Digital Services Act aims at the responsibility of digital platforms in view of the significant risks they induce for their users, by being the support of illicit, malicious, dangerous or counterfeit contents and products. In an interview given to the newspaper Le Monde, Thierry Breton summed up the main missions of the DSA in a clear manner: “what is authorized off-line must be authorized on-line, and what is prohibited off-line must be prohibited on-line.”For the European Commission, it is essential to regulate the many “lawless zones” that exist on the Web. Even though the law provides a legal framework for what is allowed or not, the cumbersome procedures and the inherent thoroughness of the investigations prevent a rapid response to the problems raised. This text is ambitious to say the least, and aims to put the weight of the 27 on the digital giants so that they adapt better to the excesses of the Internet. The web tools having a (very) consequent strike force at several levels must imperatively echo the law.

In concrete terms, this means, for example, forcing social networks and online marketplaces to communicate about their actions to control content and to force them to be much more transparent about their algorithms. This second obligation concerns all online services with more than 45 million users in Europe.

The European desire to provide a rapid response against illegal content is not new. The DSA is even more dissuasive than its predecessors: in case of failure to provide a prompt and effective response, the companies concerned will have to prove their lack of knowledge of the content in question, otherwise they will be forced to pay a fine of up to 6% of the company’s global revenues. And in case of recidivism, a structural recovery on the European market is perfectly possible.

Moreover, the DSA (Digital Services Act) also tackles the anonymization of Internet users: if necessary, pseudonyms can be removed. Companies that fail to comply with this directive could be excluded from the European market.

Another objective of this text is to simplify the European digital regulations and thus establish a single line of conduct for all 27 countries.

Finally, guaranteeing the security of online users and allowing companies in the digital sector to develop, aims to preserve the integrity of the European single market. And it is also in this horizon that the Digital Markets Act is established.

What is the DMA – Digital Markets Act

In general, the DMA (Digital Markets Act) scrutinizes the behavior of gatekeepers, the large platforms that structure the digital world in the European single market. To be considered as gatekeepers, these companies must meet several criteria :

  • Have a significant impact on the single market, i.e., an annual turnover within the European Economic Area of at least 65 million euros over the last three fiscal years. Or, have a market capitalization or enterprise value of at least 65 billion euros in the last fiscal year.
  • Have a well-known and sustainable position.
  • Have at the core of its business a service platform(s) allowing commercial users (at least 10,000 per year in Europe) to reach end users (at least 45 million/month in Europe).
  • Offer its platform in at least 3 member countries.

This Digital Markets Act fights against the behaviors of these gatekeepers, judged by the Commission as being abusive or even unconstitutional. For example, they can no longer promote their own online services by exploiting the data of their professional customers. We can thus note a broad economic and competitive dimension. The European Union wishes, thanks to the Digital Markets Act, to guarantee the liveliness of the markets and their opening to competition in order to develop and establish a balance in the commercial relations between the major players and their partners. Europe seeks to promote its own model in line with its values and which differs from the impunity that has been easily observed in the digital sphere up to now. This regulation contains a quasi-ethical principle of accountability of actors corresponding to their power on the web.

Objectively, this regulation is based on “graduated obligations”, known as “asymmetrical”, which appropriately target the largest players. These obligations concern data interoperability, data processing and transparency. Here are 3 of them:

  • Setting up silos in order to prevent the sharing of data between the different services of a platform. An explicit request for the consumer’s informed consent is required if the operator wishes to share this data.
  • No longer blocking access to the platform in case of non-registration, for both end users and commercials.
  • To give advertisers and publishers who wish to do so, the price paid by one or the other for the platform’s advertising services.

In case of non-compliance with these rules, gatekeepers are fined up to 10% of their annual global turnover. And in the event of a repeat offence, the platform’s European activity could be interrupted. Even if the thinly veiled objective is to limit what the European Commission considers the abuses of the tech giants, Thierry Breton is keen to stress that the DMA is above all “supporting innovation and competition“.

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