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The Digital Services Act and Digital Markets Act proposals to reform online services in the European Union

The European Commission’s unveiling of its Digital Services Act and Digital Markets Act proposals could open the door to a new online approach in the European Union.

The European Commission seeks to modernize the regulation of digital services and markets by presenting its proposal for the Digital Services Act (DSA) and Digital Markets Act as part of a broader legislative package that will replace the 20-year-old eCommerce Directive 2000/31/EC.

The proposals aim to implement more effective measures to protect consumers’ online rights and make digital markets fairer and more open for all, allowing for the expansion of smaller platforms, small and medium-sized businesses, and start-ups to be accessible to customers across the Single Market and reduce compliance costs.

What’s in the proposal of the Digital Services Act?

The Digital Services Act aims to

  • improve the usability of the benefits deriving from the use of online platforms in terms of advantages for consumers and innovation, facilitation of cross-border trade within and outside the EU, opening up the market to a wide range of traders)
    and
  • reduce the risks to users’ rights due to the problems associated with these online platforms, including, for example, the dissemination of illegal content or the online sale of illegal goods or services.

The proposed changes include inter alia:

  • rules for the removal of illegal goods, services, or content online;
    new obligations for large platforms to prevent abuse of their systems;
  • safeguards for users whose content has been mistakenly deleted from platforms;
  • transparency measures for online advertising and the algorithms used to suggest content to users; and
  • new powers to audit the operation of platforms.

Besides, for online platforms capable of reaching more than 10% of the EU population – roughly equivalent to 45 million users – there are specific obligations to control their risks and the introduction of a new oversight structure. With this in mind, the European Commission will have special powers to supervise large platforms and may even be able to sanction them directly.

What’s new in the proposal of the Digital Markets Act?

The focus of the Digital Markets Act, on the other hand, is to address the negative consequences of the behaviors adopted by online platforms that control access to markets, i.e., those companies that have such an impact on the internal market as to have control over the entire ecosystems of platforms.  In particular, the European Commission plans to establish harmonized rules prohibiting unfair practices by so-called “access controllers.”

Among the proposed innovations are

  • the obligation for such “gatekeepers” to adopt proactive behavior aimed at removing barriers to entry to other operators (such as, for example, measures that allow third-party software to interoperate with their services), failing which they will be subject to penalties of up to 10% of the access gatekeeper’s worldwide turnover; and
  • The European Commission’s power to conduct market surveys to supplement these standards with additional practices or new services from access controllers to ensure that the new standards keep pace with the rapid evolution of digital markets.

These proposals are in line with the New EU Platform to Business Regulation intention that is already into force and introduced new stringent obligations for online suppliers and intermediaries.  On the topic, you may read the article available HERE.

Image courtesy Microbiz Mag

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Giulio Coraggio

I am the location head of the Italian Intellectual Property & Technology department and the global co-head of the IoT and Gaming and Gambling groups at the world-leading law firm DLA Piper. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our client's success.

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