Yesterday, EU legislators approved two of the most far-reaching digital regulation laws in the world. Aimed at reigning in the power of tech companies and online businesses, the EU passed a pair of bills – the Digital Markets Act and Digital Services Act. These acts focus on addressing unfair competition, privacy concerns, and harmful content.
The Digital Services Act targets large online platforms like Facebook, Amazon, and Google. It requires them to be more proactive with content moderation and prevent the sale of illegal or unsafe goods. Additionally, it provides users with more information on how the algorithms operate and prohibits using sensitive personal data. The Digital Services Act imposes a sliding scale of requirements on social media companies, increasing the restrictions and requirements for larger companies.
On the other hand, the Digital Market Act – a competition law – focuses on preventing leading platforms from abusing their power. For example, platform holders, like Google, Microsoft, and Apple, will have to produce better interoperability with smaller services, a larger carve-out for app storefronts, and restrict favorable treatments. Similar to the Digital Services Act sliding scale, the Digital Market Act imposes obligations based on the platform’s market cap and the number of business and consumer users.
The EU plans to implement stringent enforcement measures: companies face penalties of up to 10 percent of annual global turnover for DMA violations and 6 percent for DSA breaches. Moreover, the EU is setting up an 80-person task force and a Center for Algorithmic Transparency.Â
Businesses and platforms have until January 1st, 2024 when the Digital Services Act comes into effect with the Digital Markets Act coming into force soon after.
