Digital Services Act and Digital Market Act: a few highlights

18/01/21
Digital Services Act and Digital Market Act: a few highlights
We had, in a previous publication, presented details of the genesis and initial work behind the European Commission's Digital Services Act initiative to modernise the regulatory landscape for digital services .   After several long months of preparation, two draft regulations were finally presented by the European Commission on 15 December 2020: the Digital Services Act and the Digital Market Act.   Essentially, these texts have the following objectives:
  • with regard to the Digital Services Act, to create a safer digital space in which the fundamental rights of all users of digital services (social networks, marketplaces and other digital platforms) would be protected;
  • with regard to the Digital Market Act, to establish a level playing field to foster innovation, growth and competitiveness of digital services in Europe and beyond.
For clarity, we have identified the main pillars around which these two projects are structured, the first two points below being related to the Digital Services Act, while the framework of the gatekeepers is the structuring point of the Digital Market Act.

I. Hosting provider’s status accolade

Although the status of hosting provider has been the target of many criticisms because of the feeling of impunity it could inspire, it has not been discontinued but is rather enshrined in the Digital Services Act (see on this point, our previous publication).   The philosophy of the European Commission is very clear on this point: to maintain the status of host, which is a pillar of Internet regulation, while redrawing the scope of the obligations that weigh on these players.   It should be noted that the Commission was careful to specify that platforms should not fear being denied the qualification of host on the grounds that they would implement voluntary measures to protect their users against illegal goods, services and content. Until now, the platforms have been concerned that the implementation of such measures could lead to a plea for a demonstration of their "active role" and thus deprive them of the limited liability regime applicable to hosting providers. The message is therefore clear: there is no backlash for platforms that would like to implement such proactive measures.  

II. Stepping up the fight against illegal goods, services and content on the Web

Right away, it should be specified that all online intermediaries offering their services in the single market, whether or not they are established in the European Union, will have to comply with the new rules. However, the platforms will, in some respects, be affected differently depending on their size. The Digital Services Act will impose more stringent obligations on "very large platforms" (platforms reaching more than 10% of the 450 million consumers in Europe), because of the risks they represent in terms of the dissemination of illegal content.   Among these new rules, the most notable is the obligation for the platforms to set up tools able to facilitate the reporting of illegal content and to deal as a priority with complaints from certain "trusted moderators", such as anti-discrimination associations. On this point, it is noted, on the one hand, that the obligations in terms of content removal will only cover so-called illegal content and not only "harmful" content as was sometimes discussed during the preliminary discussions and, on the other hand, that greater efforts will be expected from the "very large platforms".   As a means of mitigating the risks of censorship, the Digital Services Act ntroduces a number of protections for users, such as the ability for them to challenge content moderation decisions made by the platforms.   In addition to the issue of content moderation, there are also new obligations for the traceability of professional users in online markets to help identify sellers of illegal goods.   Finally, transparency obligations (in terms of moderation but also, for example, in terms of the algorithms used for targeted advertising), with variable geometry depending on the size of the platforms, also shape this new text.

III. Supervising gatekeepers to better control them

Gatekeepers" (or "access controllers") are those so-called "structuring" digital platforms who have today become a necessary part of economic and social relations and who have the ability to prevent new entrants from accessing the market.   While the idea had been discussed for a while, no list of gatekeepers was finally defined by the Commission in the framework of the Digital Market Act. In order to identify these players, it will therefore be necessary to rely on the criteria established by the Commission, criteria which are met if the company :
  • has a strong economic position (especially in terms of turnover), a significant impact on the internal market and is active in several EU countries;
  • has a strong intermediation position, which means that it connects a large user base to a large number of companies ;
  • occupies (or is about to occupy) an established and sustainable position in the market.
Actors qualified as "gatekeepers" will have to comply with a set of prohibitions and obligations in order to avoid a number of unfair practices. The objective advocated by the Commission is indeed to redraw the balance in order to, in a way, place the small players on an equal footing with the big ones.   Among this new arsenal of rules applicable to gatekeepers are, for example, a ban on gatekeepers offering services and products with more favourable treatment in terms of classification, a ban on pre-installing their own applications on devices, an obligation to ensure interoperability with their platform, and an obligation to share with their competitors certain data collected in the course of their services.   The approach is intended to be "dynamic" since the Digital Market Act specifies that the Commission will conduct market research and will have the opportunity to :
  • to qualify a platform as a "gatekeeper" even if the quantitative thresholds set out in the Regulation are not met;
  • to impose additional "remedies" (financial but not only financial, as the sanction could go as far as the disposal of certain activities) in the event of systematic non-compliance with the obligations provided for;
  • review and adapt the list of obligations and prohibitions applying to gatekeepers.

Next steps?

Once adopted, the final text will be directly applicable throughout the European Union. Before this, however, the text will have to be validated by the other European bodies, i.e. the European Parliament and the Council of Europe, in accordance with the ordinary legislative procedure.   The final version of these texts could therefore only come into being in many months, so their entry into force is not envisaged before 2022.   [interne id="66984"][interne id="67074"]
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