Commission publishes “Digital Services Act” package
As part of the European digital strategy, the European Commission has recently published two legislative proposals: the Digital Services Act (DSA) and the Digital Markets Act (DMA).
Online platforms influence our society, our economy, competition and also our rights online. They offer lots of benefits for consumers and encourage positive developments, such as cross-border trade and global communication. However, they also involve new risks, such as the easier distribution of illegal goods, services, and content on the Internet.
The primary aim of both projects is to create secure, fair and more open digital markets in which the fundamental rights of all users are protected. Furthermore, they are supposed to promote innovation, development and competitiveness within the EU and globally. Therefore, better and more reliable online services will be available to users. Moreover, the Digital Services Act package is supposed to lead to a larger selection of offers and fairer prices; the risk of processing illegal content is to be reduced. Another goal is to create a level playing field.
The Digital Service Act: “for a safe and responsible online environment”
The main focus of the DSA is on the protection of the consumers’ fundamental rights on the Internet, the transparency of online platforms and the promotion of innovation, development and competitiveness in the internal market.
This is to be achieved by the following measures:
- Additional measures to combat illegal goods, services or content on the Internet;
- New regulations on the traceability of commercial users to track down sellers of illegal goods easier;
- Effective safeguards for users with the possibility of contesting decisions made by the platforms to moderate content;
- Increased transparency of online platforms;
- Obligations for larger platforms to prevent misuse of their systems by taking risk-based measures and having their risk management system independently examined;
- Research access to the core data of larger platforms to track the progression of online risks;
- A supervisory structure that copes with the complexity of the online space: The member States play the lead – they are supported by a new European Digital Services Board. In the case of very large platforms, the Commission increases its monitoring and enforcement.
The Digital Service Act is intended to apply to online intermediaries, whereas the obligations of online companies vary according to their role, size and impact. For the validity of the new regulation, it does not matter whether the online intermediaries have its branch in the EU or outside, but simply whether the company offers its services in the internal market.
Special provisions are foreseen for very large online platforms. These are those that reach more than 10 % of the 450 million consumers in Europe. The reason for this is that such platforms pose a particular risk for the distribution of illegal content and therefore might be harmful to society.
The Digital Markets Act: “for fair and open digital markets”
The DMA is supposed to ensure fair markets in the digital sector. Currently, a few larger online platforms which have a significant impact on the internal market are acting as “gatekeepers”.
The DMA aims at ensuring a fair business environment for commercial users who want to offer their services in the internal market without having to rely on gatekeepers. Furthermore, the DMA is to facilitate the scaling up of start-ups who will have a clear framework EU-wide. Also, for consumers there is supposed to be a wider variety of services at fair prices in the future. Gatekeepers can continue to innovate and offer new services, but they must not use unfair practices to gain an unfair advantage. The DMA provides for future obligations and prohibitions for gatekeepers.
In the event of violations, the DMA provides for fines of up to 10 % of the company’s worldwide annual sales and penalties of up to 5 % of the average daily turnover. In the event of systematic violations of the law, the gatekeepers may be imposed additional and proportionate remedial measures after conducting a market investigation.
Both legislative projects are now being discussed in the Council of the European Union and in the European Parliament. After the decision, both provisions will be directly applicable throughout the EU.
Our antitrust and state aid team will be happy to answer any questions you may have on this topic.
11. January 2021
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