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What is the EU's 'Digital Services Act' and 'Digital Markets Act' and how do they intend to regulate the tech giants

The European Union has had the same regulation on digital services for two decades. Since the directive on electronic commerce was approved in 2000, practically nothing has changed legislatively speaking while the world on-line that it pretends to regulate has been transformed. Twenty years give a lot of changes, new developments and a remarkable evolution.

In addition to bringing new opportunities, services, technologies and businesses, This progress has also created new risks for citizens and society in general, they argue from the European Commission. The companies responsible for them have also encountered problems inherent to the platform economy and many of them, the largest, can control ecosystems with an increasing weight in the digital economy.

The DSA is, simply put, a new regulation aimed at tech giants

For this reason, they explain, "the single European market requires a modern legal framework" adapted to the reality of 2020 and the coming years. And that new game board is the Digital Services Act (DSA) or Digital Services Law; and the Digital Markets Act (DMA) or Digital Market Law.

What is Digital Services Act and the Digital Markets Act

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The Digital Services Law is a broad set of new rules governing responsibilities for digital services and that is linked to the Digital Market Law that seeks to protect the fundamental rights of users in the digital world. The DSA is, in short, a new regulation aimed at the technological giants, the new services they provide and their impact on society as a whole.

The Commission with this proposal to renew the legal framework of the digital world pursues two objectives, ensures: create a more secure digital space in which the fundamental rights of all users of digital services are protected and establish a level playing field to promote innovation, growth and competitiveness, both in the European single market and Worldwide. Create new rules on digital markets and services.

The ambitious legislative proposal especially takes into account that online platforms, apart from providing significant advantages to private and business users, can be abused to spread or trade illegal content or items.

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It also takes into account that many of these spaces in the network have practically been erected as digital public squares for the exchange of information. "These have become systemic and pose special risks to user rights, information flows and the participation of the population," they explain from the European Commission. Fundamentally, for the freedom of expression of citizens.

It is for all these reasons that the proposed Digital Services Law intends to introduce binding obligations at European Union level for all digital services that connect consumers with goods, services or content. Mandates graduated based on both the size and impact of the services it will affect, which are:

  • rules on the withdrawal of illegal goods, services or content online; safeguards for users whose content has been erroneously deleted by the platforms;

  • new obligations for platforms to adopt risk-based measures to prevent abuse of their systems;

  • wide-ranging transparency measures, including those relating to online advertising and the algorithms used to recommend content to users;

  • new powers to control the operation of platforms, for example, facilitating researchers' access to key data on those platforms;

  • new rules on traceability of companies in online markets, to help locate sellers of illegal goods or services;

  • an innovative cooperation process between public authorities to ensure effective implementation throughout the single market.

In addition to these obligations that will be specified in the future, those platforms that reach more than 45 million users, that is, more than 10% of the population of the European Union, will be considered "systemic". This means that its impact is greater and, in addition to the obligations that will affect all players in the digital market, will be subject to a new supervisory structure.

Both new laws would establish binding obligations at the level of the European Union for all digital services and would curb large technology companies to a greater or lesser extent.

"This new accountability framework will be made up of a council of national coordinators of digital services, with special powers for the Commission to supervise very large platforms, including the power to sanction them directly," the European Commission advances for now.

For its part, the Digital Markets Act o The Digital Market Law aims to address "the negative consequences derived from the behavior of certain platforms that act as 'gatekeepers' in the single market". That is, in practice, of big technology.

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The European Commission considers that these companies, due to the diverse impacts that their services have in different economic and social areas, "They have the power to act as private standard-setters and to serve as bottlenecks between businesses and consumers.". In fact, it highlights that even these companies sometimes control entire platform ecosystems. Hence, they want to put an end to them with this new standard on digital markets that, we quote verbatim:

  • it will apply only to the main basic platform service providers most prone to unfair practices, such as search engines, social networks or online intermediation services, that meet the objective legislative criteria to be designated as gatekeepers;

  • It will define quantitative thresholds on which the determination of the presumed guardians of access will be based. The Commission will also have the power to designate companies as gatekeepers following a market investigation;

  • will prohibit a series of manifestly unfair practices, such as preventing users from uninstalling pre-installed computer programs or applications;

  • require access gatekeepers to proactively take certain measures, for example, specific measures by which third-party software is allowed to function properly and interact with its own services;

  • will impose penalties for non-compliance that could result in fines of up to 10% of the global turnover of the gatekeeper, in order to ensure the effectiveness of the new rules. In the case of recurrent offenders, these sanctions may also entail the obligation to adopt structural measures, which could extend to the divestment of certain companies, when no other equally effective alternative measure is available to ensure compliance.

  • The Commission may carry out targeted market research to assess whether new practices and services of gatekeepers need to be added to these rules to ensure that the new rules on gatekeepers keep pace with the fast pace of markets. digital.

What's next with the Digital Services Act

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As we have said, this new legislation is for now a proposal from the European Commission. Now it is the turn of the European Parliament and the Member States to debate these proposals according to the ordinary legislative procedure. Therefore, it must still be approved or rejected.

The standard on digital services and the standard on digital markets have been drawn up after deep reflection by the parties involved, with consultations included to them during this past summer. Between June 2020 and September 2020, in addition, public consultations were carried out, receiving 3,000 responses.

The final wording of these standards could completely change the current technological landscape

Of its subsequent processing It depends on whether both standards affect companies such as Facebook, Google, Amazon or Apple to a greater or lesser degree and that the European Union leads the regulation of the digital age in which we live.

Its regulation could have effects as fundamental as those concerning freedom of expression on the Internet and its protection, the size and power of technology companies that currently control different large platforms and services, or a hypothetical forced interoperability between services such as those of messaging to allow a more comfortable competition entry. Decisions that could completely change today's technology landscape.