Europe proposes comprehensive rules for digital services
By Dr. Fiona Murray, Passerelle
This week the European Commission presented two new draft laws that will profoundly impact the way companies of all sizes, European and global, provide services online in the European Union.
As the US, UK and other jurisdictions are increasingly taking action to tackle unfair practices by large online platforms, the EU wants to go further, adopting laws that set global standards for the way all companies do business online.
The ambitious new EU package seeks to strengthen consumer rights, increase the transparency and accountability of platforms, facilitate the removal of illegal content and increase competition in the marketplace.
Both proposals will now follow the usual legislative scrutiny by the EU Council (Member States) and European Parliament before adoption.
What does this mean for business
The proposed Digital Services Act (DCA) will apply to all digital services providers doing business in the EU including social media, online marketplaces and platforms.
The DCA will introduce new obligations for digital services, graduated according to the scale and impact of those services. Specific provisions cover removal of illegal goods, services or content online, safeguards for users whose content has been erroneously deleted, broad transparency measures including on advertising and algorithms. In addition, platforms reaching more than 10% of the EU population will be subject to a new oversight regime comprising a board of national Digital Services Coordinators and special powers for the European Commission to supervise and ultimately impose fines.
The proposed Digital Markets Act (DMA) applies specifically to large online platforms acting as ‘gatekeepers’ for business users to the EU single market who have the power to use unfair practices to prevent or restrict business users and competitors from reaching consumers. The DMA includes criteria for designating gatekeepers including following a market investigation by the European Commission. It defines and prohibits unfair business practices such as blocking users from uninstalling any pre-installed software or apps and obliges gatekeepers to set specific measures for example that would permit the software of third parties to function and interoperate with a gatekeeper’s own services. Sanctions for non-compliance could include fines of up to 10% of a gatekeeper’s global turnover.
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