In this contribution we examine the main pratical implications of the Digital Service Act (DSA) and the Digital Market Act (DMA).
In a previous article we discussed the rationale behind these regulations and the rules in general they introduce.
1. The main practical implications of the DSA
1.1 There will be new measures to counter illegal online goods, services and content:
"Illegal content" refers, for example, to sharing images of child sexual abuse, unlawful and unauthorised sharing of private images, online stalking, the sale of non-compliant or counterfeit products, the sale of products or the provision of services that violate consumer protection law, the unauthorised use of copyrighted material, the illegal provision of accommodation services or the illegal sale of live animals.
The DSA introduces new mechanisms allowing users to flag illegal online content and for platforms to cooperate with specialised "trusted flaggers" to identify and remove illegal content.
Trusted flagger status is granted to entities that , meet each of the following conditions:
- have specific expertise and competence in detecting, identifying and notifying illegal content;
- represent collective interests and are independent from any provider of online platforms;
- carry out their activities for the purpose of submitting notices diligently, accurately and objectively.
Working with entitled trusted flaggers may be of interest to, for example, brand owners who are fighting counterfeit goods and want them to be faster and easier flagged and removed.
At the same time, online platforms must put mandatory procedures in place for removing illegal goods.
1.2 Every intermediary service - including online platforms - should appoint a central point of contact through whom users can communicate directly, quickly and in a user-friendly manner.
Firstly, intermediary services must designate a single electronic point of contact that should serve operational purposes that can also be used by trusted flaggers and by professional entities which are under a specific relationship with the provider of intermediary services.
They should also be required to designate a single point of contact for recipients of services, enabling rapid, direct and efficient communication in particular by easily accessible means such as telephone numbers, email addresses, electronic contact forms, chatbots or instant messaging. This to allow recipients of services to choose means of direct and efficient communication which do not solely rely on automated tools.
Business users, consumers and other users are considered to be ‘recipients of the service’. Thus both businesses that use an online platform to offer their goods and consumers who wish to purchase goods through an online platform.
1.3 Users will have new rights.
Users will be able to report illegal content, to send complains to a platform, to challenge platform decisions through a user-friendly internal complaint system when their content is removed or restricted and to demand to be informed when this happens, to reach amicable settlements, to complain to their national authority in their own language or to seek for compensation for breaches of the rules. Representative organisations will also be able to defend user rights in cases of large-scale breaches of the law.
1.4 There will also be new rules on the traceability of business users on online marketplaces to help to trace sellers of illegal goods.
Online marketplaces will be obliged to trace their sellers (according to the "know your customer" principle) through samples in existing databases. In doing so, they must check random whether products or services on their sites are compliant. They must make efforts to enhance the product traceability through advanced technological solutions.
This will ensure a safe, transparent and trustworthy environment for consumers and discourage sellers who abuse platforms from selling unsafe or counterfeit goods.
1.5 More transparency on advertising: certain types of targeted advertising will be banned on online platforms.
This concerns advertising by profiling children or based on certain categories of personal data, such as ethnicity, political views, sexual orientation.
1.6 There will be not only more transparency on advertising but online platforms will have to be more transparent in various areas.
Platforms must be more transparent in various areas, such as to give better information on their terms and conditions and to be transparent on the algorithms used for recommending content and products to users.
For instance, online platforms will have to make their websites and apps such that business users can easily fulfil their information obligations to end users.
1.7 Very large platforms will have increased responsibilities.
Very large platforms and very large online search engines will have obligations to take measures to prevent abuse of their systems by taking risk-based measures.
More specifically, risks of disinformation, hoaxes, influencing elections, cyber violence against women or harmful content for minors must be addressed. These measures must be made subject to independent audits as they could potentially restrict the freedom of expression.
1.8 Platforms must have a crisis response mechanism in cases of serious public health and security crises, such as pandemic and war.
1.9 There will also be a ban on using so-called 'dark pattern' (misleading links) on the interface of online platforms
This ban is to prevent that such 'dark pattern' manipulate users to make choices they do not intend to make.
For example, when users are directed away to a suspicious website they did not want to visit.
1.10 Last but not least, supervisory structures will be established.
An EU-wide cooperation mechanism will be set up between national regulators and the EU-Commission. EU countries will assume the main role, supported by a new European Digital Services Council.
In the case of very large online platforms and very large online search engines, the EU-Commission will have direct supervisory and executive powers and, in the most serious cases, the Commission can impose fines of up to 6% of a service provider's global turnover and even ask the courts to temporarily suspend the operation of rogue platforms that refuse to comply with important obligations putting people's lives and safety at risk.
2. The main practical implications of the DMA
2.1 The main novelty introduced by the DMA, is the concept of "gatekeepers", the key players in the context of the digital economy.
Not only Amazon, Alibaba and other similar market platforms, but also Apple with its app store, Google with its dominant search engine or Facebook with its huge amount of information on its users are considered gatekeepers. These gatekeepers will now have a number of obligations and prohibitions in order to make the digital economy accessible and free for everybody.
Companies must assess whether they meet the criteria of the DMA to be considered as gatekeepers and must provide the Commission with information on this regard.
The Commission will then, based on this information or after a market investigation, designate as "gatekeepers" those companies that meet the thresholds of the DMA.
No later than six months after a company has been designated as a gatekeeper, it will have then to comply with the obligations and prohibitions set out in the DMA. Gatekeepers that are not based in the EU, must appoint a legal representative within the EU who will serve as a point of contact.
2.2 Some of the obligations imposed on gatekeepers by the DMA include for example:
- End users must be able to easily un-install pre-installed apps or change default settings on operating systems, virtual assistants or web browsers that steer them to the products and services of the gatekeeper, and they must have access to choice screens for selecting key services;
- End users must be allowed to install third party apps or app stores that use or interoperate with the operating system of the gatekeeper;
- End users must be allowed to unsubscribe from core platform services of the gatekeeper as easily as they subscribe to them;
- Third parties must be able to contact the gatekeeper's own services, and raise questions and send queries;
- Professional users who advertise on their platform must be given access to the performance measurement tools of the gatekeeper and to the information necessary for advertisers and publishers to check themselves the results of their advertisements;
- Professional users must be able to promote their offers via the gatekeeper's platform, but must also be able to conclude contracts with their customers outside the gatekeeper's platform;
- Professional users must have access to the data generated during their activities on the gatekeeper's platform.
2.3 In addition to these obligations, the gatekeepers are also subject to many prohibitions, such as:
- using the data of professional users if the gatekeepers compete with them on their own platform;
- ranking the gatekeeper's own products or services more favorable compared to those of third parties, for example in app stores;
- requiring that app developers use certain of the gatekeeper's services (such as payment systems or authentication offers) in order to appear in app stores of the gatekeeper;
- tracking end users outside the gatekeepers' core platform service for the purpose of targeted advertising, without effective consent having been granted;
- prohibit end users from contacting companies outside the platform;
- preventing users from uninstalling automatically installed software or apps.
2.4 The DMA has tried to balance the legitimate interests of gatekeepers with the interests of professional users and end-users. Gatekeepers are still allowed to do the following:
- to enable third parties to cooperate with the gatekeeper's own services in certain specific situations;
- to give professional users access to the data they generate themselves on the gatekeeper's platform;
- to provide advertisers and publishers using their platform with the necessary tools and information to analyse ads themselves on the gatekeeper platform;
- to enable professional users to promote their offerings on the platform and conclude contracts with customers outside the platform.
2.5 What happens if a gatekeeper ignores the rules?
The Commission can impose fines of up to 10% of the gatekeeper's total worldwide annual turnover or 20% in the event of repeated infringements and a non compliance penalty of up to 5% of the gatekeeper's total worldwide daily turnover.
The Commission can impose additional measure in case of systematic infringements.
Only the Commission will have the competence to enforce the DMA and can:
- ascertain whether companies are operating as gatekeepers and possibly may conduct a market investigation to assess whether a company that does not meet the quantitative criteria nevertheless does meet qualitative criteria to qualify as a gatekeeper;
- eventually dynamically update the obligations of gatekeepers if necessary;
- remedy systematic breaches of the DMA.
3. General conclusion
With these two regulations, it is clear that the EU wants to shape the digital future for Europe itself and not to suffer the omnipotence of the big players.
Both the DSA and DMA aim to create a safer digital space where users' fundamental rights are guaranteed and protected, a strong framework for transparency is imposed and clear responsibilities are defined to boost competition on the digital market.
These rules apply within the EU but also apply to online intermediary services established outside the European Union who offer their services in the EU.
Actually, the DSA ensures that citizens enjoy better protection of their fundamental rights, have more choice which should result in lower prices, and will be less affected by illegal content on online platforms.
Providers of digital services, in turn, will get more legal certainty and know better where they stand because the regulations are harmonised.
Professional users of digital services will have more choice with respect to providers which should also lead to better conditions for them, better access to the wide EU market via online platforms and a better protection against illegal content providers, such as counterfeited goods. Moreover, they will be assured of quick and user-friendly contact with the digital platform on which they are actif.
Overall, the DSA provides a democratic control of dominant online platforms so that there will be less risk for manipulation and disinformation for example.
The DMA in turn seeks to combat the anti-competition practices of digital giants such as Google, Apple and Amazon and correct their dominance in the European digital market by imposing new obligations and bans subject to heavy fines. This would give more opportunities to stimulate smaller platforms, SMEs and startups to grow and compete on markets which are dominated by dominant players.
Innovative companies will be guaranteed a level playing field with larger platforms that will provide more choice for end users. It will be easier for end users to access and work with services that are an alternative to the gatekeepers and they will be able to switch platforms more easily. This should lead to better services at lower prices for end users.
For businesses, the two regulations are of great importance because they make digital services more open and safer and harmonise and clarify the rules in the EU. They provide a global benchmark that gives online businesses a modern, clear and transparent framework that respects rights and enforces obligations.
This offers new opportunities worldwide to innovate, to grow and to compete on an equal basis.
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New EU rules on digital services and markets will soon come into force