Digital economy

EU Digital Markets Act and Digital Services Act explained

Published

1 year ago

December 16, 2021

Two major EU pieces of legislation are about to change the digital landscape. Find out what the Digital Markets Act and Digital Services Act are all about.

The power of digital platforms

Over the last two decades, digital platforms have become an integral part of our lives - it’s hard to imagine doing anything online without Amazon, Google or Facebook.

While the benefits of this transformation are evident, the dominant position gained by some of these platforms gives them significant advantages over competitors, but also undue influence over democracy, fundamental rights, societies and the economy. They often determine future innovations or consumer choice and serve as so-called gatekeepers between businesses and internet users.

To address this imbalance, the EU is working on upgrading the current rules governing digital services by introducing the Digital Markets Act (DMA) and the Digital Services Act (DSA), which will create a single set of rules applicable across the EU. > 100,000 Number of online platforms operating in the EU. More than 90% of these are small and medium-sized enterprises.

Find out what the EU is doing to shape the digital transformation.

Regulating big tech practices: Digital Markets Act

The purpose of the Digital Markets Act is to ensure a level playing field for all digital companies, regardless of their size. The regulation will lay down clear rules for big platforms - a list of “dos” and “don’ts” - which aim to stop them from imposing unfair conditions on businesses and consumers. Such practices include ranking services and products offered by the gatekeeper itself higher than similar services or products offered by third parties on the gatekeeper's platform or not giving users the possibility of uninstalling any preinstalled software or app.

The rules should boost innovation, growth and competitiveness and will help smaller companies and start-ups compete with very large players. Today, it is clear that competition rules alone cannot address all the problems we are facing with tech giants and their ability to set the rules by engaging in unfair business practices. The Digital Markets Act will rule out these practices, sending a strong signal to all consumers and businesses in the Single Market: rules are set by the co-legislators, not private companies Andreas Schwab (EPP, Germany) Leading MEP on the Digital Markets Act.

The Digital Markets Act will also set out the criteria for identifying large online platforms as gatekeepers and will give the European Commission the power to carry out market investigations, allowing for updating the obligations for gatekeepers when necessary and sanctioning bad behaviour.

Safer digital space: Digital Services Act

The Digital Services Act focuses on creating a safer digital space for digital users and companies, by protecting fundamental rights online. Among the core concerns tackled by this law are the trade and exchange of illegal goods, services and content online and algorithmic systems amplifying the spread of disinformation.

The Digital Services Act will give people more control over what they see online: users will be able to decide whether they want to allow targeted advertising or not and will have clear information over why specific content is recommended to them.

The new rules will also help protect users from harmful and illegal content. They will significantly improve the removal of illegal content, making sure it is done as fast as possible. It will also help tackle harmful content which, like political or health-related disinformation, doesn’t have to be illegal and introduce better rules for content moderation and the protection of freedom of speech. Users will be informed about the removal of their content by platforms and be able to contest it.

The Digital Services Act will also contain rules making sure that products sold online are safe and follow the highest standards set in the EU. Users will have better knowledge of the real sellers of products that they buy online.

Next steps

Parliament will debate on its position on the Digital Markets Act on 14 December and vote on it on 15 December. It will then be able to start negotiations with the EU governments in the first half of 2022.

The internal market committee approved its position on the Digital Services Act on 14 December. This text will be considered and voted on by the whole Parliament in January, which would allow for negotiations with EU countries in the Council to also start in the first half of 2022.

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