AN OVERVIEW OF THE LEGISLATIVE PACKAGE FOR DIGITAL SERVICES

Following the adoption of the Digital Services Package at first reading by the European Parliament in July 2022, both the Digital Services Act and the Digital Markets Act were adopted by the Council of the European Union, signed by the Presidents of both institutions and published in the Official Journal. 

What do these two acts that form the new package for digital services contain? Why was it necessary to adopt them? What are the already expired deadlines of these two acts and what will be next?

In this short article, we will provide an initial answer to these questions, reserving discussion of the individual acts for later publication on the Aiternalex blog.

Why was it necessary to adopt the DSA of the DMA?

Digital services have a significant impact and are aimed at simplifying our lives. We use them in many aspects of our daily lives and it would be difficult to do without them in both our personal and work lives to communicate, shop, order food, find information, watch films and listen to music. Digital services have also streamlined business practices and greatly expanded the target market even for micro, SME and craft enterprises.  

The benefits of digital transformation are obvious and numerous, but they bring with them new paradigms that bring with them new problems. One of the main problems is the trade and exchange of illegal goods, services and content online. Online services are also misused today by algorithmic systems to manipulate the opinion of EU citizens through the dissemination of disinformation or through other illegal practices. The way online platforms deal with these challenges has a huge impact on the lives of individual EU citizens.

In spite of a number of European-level interventions aimed at combating illegal or unfair practices in the digital sector, at the beginning of the second decade of the new millennium we still have significant shortcomings to address. Undoubtedly one of these is the oligopoly of a few large platforms controlling important ecosystems of the digital economy. These have established themselves as true regulators of digital markets, and their rules sometimes result in unfair conditions for companies using their platforms and less choice for consumers.

This is why the Union has adopted a modern legal framework to guarantee the security of the citizens of the Union (as users of digital services).

DSA & DMA

The Digital Services Act or Digital Service Act (hereafter also only ‘DSA’) and the Digital Market Act (hereafter also only ‘DMA’) constitute a single set of regulations applicable throughout the EU which aim to 

1. create a secure digital space for Union citizens, where the fundamental rights of users using digital services are protected,  as well as 
2. Establishing a level playing field in competition between digital companies to foster innovation, growth and competitiveness, both in the European single market and globally.

What is meant by Digital Services? To whom are the DSA & DMA addressed? What is the content of the two Acts?

Digital services encompass a broad category of services that can be used online, from simple websites to web-related infrastructure services and online platforms.

The DSA is a comprehensive set of new rules governing the responsibilities of digital services that act as intermediaries within the EU to digitally connect consumers with goods, services and content. In this context, ‘digital services’ refers to online platforms, such as marketplaces and social media.

The DSA establishes clear due diligence obligations for online platforms and other online intermediaries. The law also provides measures to deter rogue traders from reaching consumers. The DSA also provides greater transparency requirements for online platforms regarding decisions on content removal and moderation and advertising.

The DMA, on the other hand, includes rules regulating online platforms referred to as gatekeepers; it aims to make markets in the digital sector fairer and more competitive. To this end, the Digital Markets Act establishes a set of clearly defined objective criteria to identify gatekeepers.

Gatekeepers are large digital platforms that provide so-called basic services, such as online search engines, app stores and messaging services. Gatekeeper platforms are digital platforms with a relevant role in the internal, systemic market that act as a filter between companies and consumers for important digital services. Gatekeepers will be required to comply with the do’s (i.e. obligations) and don’ts (i.e. prohibitions) listed in the DMA. 

The DMA is one of the first regulatory instruments to comprehensively regulate the gatekeeper power of the largest digital companies. The DMA complements, but does not change, the EU competition rules, which continue to apply in full.

The Roadmap

The DSA was published in the Official Journal on 27 October 2022 and entered into force on 16 November 2022. The DSA will be directly applicable throughout the EU and will apply from 17 February 2024.

Online platforms were obliged to publish the number of active users by 17 February 2023. The platform or search engine with more than 45 million users (10 per cent of the European population) was designated as a very large online platform or very large online search engine on 25 April 2023 by the Commission: 

Very Large Online Platforms:

• Alibaba AliExpress
• Amazon Store
• Apple AppStore
• Booking.com
• Facebook
• Google Play
• Google Maps
• Google Shopping
• Instagram
• LinkedIn
• Pinterest
• Snapchat
• TikTok
• Twitter
• Wikipedia
• YouTube
• Zalando

Very Large Online Search Engines:

• Bing
• Google Search. 

These entities were given four months to comply with the obligations of the DSA, which included completing and submitting their first annual risk assessment to the Commission.

On 12 October 2022, the DMA was published in the Official Journal and entered into force on 1 November 2022. By 3 July 2023, the companies had to provide the Commission with information on their number of users, so the Commission, on 6 September, designated 6 companies as gatekeepers pursuant to Article 3 of the aforementioned regulation. These are 

• Alphabet
• Amazon
• Apple
• ByteDance
• Meta 
• Microsoft. 

Gatekeepers will have until March 2024 to ensure compliance with the obligations of the DMA.