Proposals for Digital Services Act and Digital Markets Acts issued
The European Commission issued on 15th of December the long awaited proposals for the Digital Services Act (“DSA”) and the Digital Markets Act (“DMA”) that are supposed to lay down the foundation for the digital space reform.
The new regulations are one important step on the path to implement the European data strategy as well as the European Commission’s Intellectual Property Action Plan to fight against infringement of intellectual property rights.
The megatrends of digital transformation and exploding use of online social networks further accelerated by the pandemic, have triggered new risks and challenges. Therefore, the provision of intermediary services across the internal market compels harmonization. The new rules will govern social media, online market places and other online platforms operating in Europe and have an ambitious objective: they are supposed to provide better protection for consumers as well as enhance transparency in the digital markets. The legislative whole is also expected to promote innovation, security and competitiveness.
DSA aims to increase transparency and manage illegal and other harmful content online
The Digital Services Act is expected to implement new tools for faster removal of illegal goods, services and content and safeguard better protection for users, setting forth clear responsibilities for intermediary service providers such as online platforms. By way of example, the DSA includes a notice-and-action mechanism addressing illegal content online in alignment, although in somewhat clarified form, with the current e-commerce directive. Illegal content may include, for example, copyright infringements, terrorist content, child abuse or hate speech as well as illegal products. Further, certain online platforms will be obliged to provide information on traders using their services. The DSA will also implement a possibility to object to the online platform’s content moderation choices. Large online platforms will be responsible, in general, for higher transparency as to how the platform, its advertising and algorithms operate. All these changes are supposed to enhance users’ security and result in a safe(r) online environment. Very large online platforms will also be subject to enhanced supervision.
DMA aims to rein in technology giants operating as digital gatekeepers
The Digital Markets Act, in turn, is expected to harmonize rules defining and prohibiting unfair practices by very large online platforms such as search engines, social networks or online intermediators, which provide core services while acting as “digital gatekeepers” because of their market power enabling them to control large platform ecosystems, including their business users and competitors, even by managing access to consumers or exploiting user data in an unfair manner. The unfair trade practices are especially harmful in platform lock-down situations where the users do not have a meaningful option to switch to another platform. The purpose of the DMA is to define these unfair practices, introduce clear prohibitions to such activities and provide an effective enforcement mechanism to address unfair practices based on market investigations, including fines of up to 10% of the gatekeeper’s worldwide turnover. The changes are expected to help small and medium size enterprises and start-ups in competition against technology giants.
As the new regulations will implement one set of rules for the entire EU, digital services providers will need to adjust to the upcoming changes and implement standardised procedures concerning, for example take down of illegal content and transparency of content moderation. Further, large online platforms will need to ensure that they operate responsibly in compliance with the new rules. However, it will still take substantial amount of time until the new rules come into force. The European Commission submitted the Acts as legislative proposals to the European Parliament, which, in turn, will discuss the proposal in the ordinary legislative procedure together with the Council. The Parliament and the Council may accept the text as proposed or choose to amend it, or, even reject the proposals altogether. While it may take several months or even years until the proposals are processed and the acts – hopefully – come into force, once adopted, the DSA and DMA will be directly applicable across the European Union. The new regulations will, however, not limit any obligations arising under the general data protection regulation (“GDPR”) or other Union rules on the protection of personal data and privacy of communications. Further, also the e-commerce directive will continue in force in amended form.
Developments on the DSA and DMA level are closely followed in various forums also in Finland: the European legislative framework and changes in online regulatory environment is monitored in connection with the IPR steering group appointed by the Ministry of Economic Affairs and Employment of Finland, which is in the process of creating the new IPR strategy for Finland. “Any actions to promote innovation within the fields of data, artificial intelligence and platform business should be planned in light of the developing European regulatory framework” says Anna Haapanen, a member of the IPR steering group.