1. What are the two approaches?
The EU has put in place two separate laws: the Digital Services Act and the Digital Markets Act, both better known by their initials, DSA and DMA. The DSA became legally enforceable on Aug. 25, laying out content rules for social media platforms, online marketplaces and app stores. It forces their owners to clamp down on misinformation and objectionable content such as hate speech, terrorist propaganda and ads for unsafe toys. The DMA establishes a range of prohibitions and obligations for technology firms that hold a dominant position in the market, overhauling the way they do business in the EU to reflect decades of antitrust enforcement.
2. How does the DSA work?
National governments get more power to force the big tech companies to take down material that is illegal. It also obliges them to submit risk assessments to the EU’s executive branch, the European Commission, that detail how they are mitigating the impact of harmful content. If it’s found they’re not doing enough, they may be told to alter the algorithms that decide what posts users see. Failure to comply could lead to fines running to 6% of their annual revenue. Additional powers to combat misinformation could be triggered during a crisis, such as a war or a pandemic. The commission will decide what constitutes harmful content, though it’s more likely to focus on the mitigation methods put in place by the platforms than to demand the removal of specific posts. Ads aimed at children — a significant source of revenue for the companies that own Facebook and Google — will be banned.
3. What’s in the DMA?
Six tech giants — Alphabet, Amazon, Apple Inc., Tiktok owner ByteDance Ltd., Meta and Microsoft Corp. — will face a range of new prohibitions and obligations. For example, it will be illegal for their platforms to favor their own services over those of rivals. They’ll be barred from combining personal data across their different services, and prohibited from using data they collect from third-party merchants to compete against them. Here’s what else may be in store for these designated “gatekeepers” of the digital economy:
• Apple may no longer be able to prevent iPhone users from downloading apps directly from a third-party app developer outside of its own App Store
• Meta could be barred from combining personal data obtained from its Facebook and Instagram social networks with data from its other services, such as Facebook Dating or Facebook Marketplace
• Amazon may be prohibited from using data it collects from sellers on its platforms in order to create products that compete against them
Platforms that violate the DMA’s long list of rules risk fines of as much as 10% of their worldwide annual sales. This could rise to 20% in the event of repeat infringements and the commission could even demand a company be broken up in the case of systemic violations.
4. How big a deal is this?
EU Internal Market Commissioner Thierry Breton said the DSA and the DMA make the bloc the first jurisdiction in the world where online platforms no longer set their own rules. The DMA is influenced by a series of EU probes into abuses of monopoly power by the tech giants and aims to ward off potential antitrust violations to ensure the tech giants cannot distort competition in new markets. It’s already having an impact, with Meta delaying the rollout of its Threads microblogging platform for fear of running foul of the rules on cross-platform data sharing. When it comes to the DSA, what isn’t clear is how vigorously different national governments and the commission will use these new legal tools. A lot of “fake news” and misinformation isn’t strictly illegal in many European countries, so much will depend on whether the commission can make the platforms adjust their algorithms so that such content becomes less visible to users.
5. How are tech firms responding?
After lobbying the commission and national governments to try to water down the new rules, they’ve started getting into line. To comply with the DSA, Google said it’s expanding access to data used by its ad business and disclosing more information about content moderation operations for services like Google Search. Meta said it’s ending targeting of ads for teenagers based on their app activity on Facebook and Instagram. Bytedance announced it would allow users to report illegal content and choose a feed that has not been personalized. The companies have until March 2024 to comply with the DMA. The EU’s antitrust division is trying to extract commitments from the tech giants that would bring them in line with the act, including a truce in a far-reaching investigation into abusive practices on Amazon’s Marketplace platform.
6. What could go wrong for the EU?
The commission has recruited dozens of people to monitor and enforce the laws. But that may still not be enough, particularly if it’s faced with a deluge of court cases to add to its ongoing implementation and enforcement work. The commission expects the big tech firms to test the limits of the new laws and appeal against them. Amazon and Zalando SE have already filed suit at the Luxembourg-based EU General Court in an effort to avoid being targeted by the DSA. Competition experts challenges to the DMA too, and those cases will take time to work their way through EU courts.
7. Is the EU leading the way here?
Various branches of the US government including the Commerce Department initially opposed the EU rules, arguing that they unfairly target American companies. But Washington lawmakers have since proposed bills that resemble parts of the DSA and DMA. They would include provisions to bar big firms from using their platforms to promote their own products. Other measures would ensure smartphone users can download apps from alternative online stores. So far, most efforts to regulate the big tech firms at the federal level have failed.
–With assistance from Paul Geitner.
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