EU’s Digital Service Act (DSA) & Digital Market Act (DMA)

In 2022, the EU will adopt two new pieces of legislation – the Digital Services Act (DSA), and the Digital Markets Act (DMA) – that will impact Big Tech directly. The pressure is on policymakers, as the French Presidency of the EU Council wants to see these materialised as soon as possible. Here, we track their progress and what this means for Big Tech. 

DSA and DMA aim to regulate online platforms, which is why they are often discussed together. Yet, they regulate different aspects. 

The DSA is concerned with harmful and illegal goods, services, and content online. The DMA addresses competition and antitrust issues. See the fact box on the next page.  

Survey of EU’s DSA and DMA regulation

The Digital Service Act (DSA) The Digital Markets Act (DMA)
What will they regulate?The DSA is concerned with harmful and illegal goods, services, and content online. 

It will replace the E-Commerce Directive (2000).
The DMA is concerned with competition and antitrust issues.   
It will broaden the range of existing measures for investigating and correcting market practices by creating ex ante rules that prohibit certain behaviours.
Who will be regulated by the new laws?Intermediary services, that is, companies whose business places them between sellers and customers. 
Companies will be categorised according to the type of service they offer, that is:
– Basic intermediary service providers, including ISPs, domain name registrars, etc
– Hosting service providers, including cloud, web hosting services, etc
– Online platforms, including marketplaces and social networks
– Very large online platforms, that is, those with at least 45 million average monthly active users.
These definitions are still up for debate. The EU Council, for instance, thinks that the law should include a reference to online search engines; there’s no such reference in the Parliament’s draft.
Gatekeepers, which in practice means only a small number of tech companies. 
The original proposal defines gatekeepers as those companies that control core services on the internet, and which service more than 45 million users and 10 000 business users in the EU per month.
One open issue relates to this definition. The European Parliament, for instance, thinks that smart devices such as virtual assistants should be added to the list of core services due to their growing demand. The Council calls this ‘voice assistant technology’, which could be interpreted a bit differently.
Another question relates to the size of companies: the proposal targets companies with more than €8 billion in annual turnover and a market value of €80 billion. While the Council and Parliament are likely to agree, there will be rebukes from across the ocean.
How will they be regulated?This depends on the type of intermediary services. The original proposal describes a basic set of obligations for intermediary service providers but heftier rules for the other categories. This means more transparency and consumer protection-related obligations for these companies.

Up for serious debate is a list of stricter obligations for online marketplaces and very large online platforms – such as rules on how to tackle illegal and harmful content – something which both the Council and the Parliament want. This is where the crux of DSA negotiations lies.
The original proposal lists what a gatekeeper is prohibited from doing, such as giving preference to its own goods and services over those of others using its platforms. 
Things a gatekeeper should do include allowing users to uninstall native software and allowing business users access to the platform’s data. 
The Council and Parliament are asking for more. For instance, a ban on the use of children’s data and easier ways for users to unsubscribe from a core service. The devil will be in the details.

New laws and USA-EU relation

Across the pond, the US government is in a bit of a bind. It wants to advance its antitrust agenda on its home turf, but also wants to defend US tech firms overseas. Of the two, the transatlantic issue is a more serious problem. It’s been reported that the US government has called on EU policymakers not to raise the threshold for defining gatekeepers under the DMA. The higher the thresholds, the more concentration around Big Tech the law will be – something the USA thinks is discriminatory. 

There’s even more bipartisan pressure on the administration to tackle this with the EU. The Senate Finance Committee thinks that both laws ‘must apply equally to firms based in Europe, China, the United States, and other countries’ in order to not give non-US companies a competitive advantage. Still, this argument is unlikely to hold water, considering that the world’s most valuable tech companies are US companies.

Lobbying in Brussels

‘Big Tech firms are therefore throwing immense resources (that they can easily afford) on a scale rarely seen to influence, persuade and cajole members of the European Parliament, member state governments and European Commission officials to roll back the obligations the DMA would impose’, BEUC’s deputy director-general wrote

‘Not only are they lobbying in their own names, but they are also deploying trade associations, think tanks and “favourable” academics to mirror, endorse, and amplify their arguments. They have even claimed to represent the best interests of small and medium-sized companies (!), much to the annoyance of genuine SME representatives.’