Europe to curb Big Tech dominance with new Digital Services Act?
- For the first time, the EU passed a major piece of legislation — Digital Services Act — that sets the rules on how companies should keep users safe on the internet
- Tech giants will be forced to disclose to EU regulators how they are tackling disinformation and war propaganda in order to curb the spread of fake information
- Those who breach the rules face heavy fines and bans from operating within the EU
For decades now, antitrust bodies in Europe have been perceived as ineffective and too slow to react toward Big Tech. Over the last few years, however, the European Union has been dramatically escalating its antitrust stance. Just when it seemed that the European Commissioner could not have gotten more stringent than it did with its Digital Markets Act (DMA), they passed another sweeping law known as the Digital Services Act.
The DMA was the EU’s first overhaul in 20 years of the rules that govern competition on the internet, and it targets so-called gatekeeper firms, requiring them to change allegedly anticompetitive practices, or face major fines. The DMA, to be implemented by 2023, comes three years after Europe’s GDPR ruling forced the big tech firms to dramatically overhaul how they deal with user data.
This time around, a second major piece of technology legislation that has been in the works in the wake of the DMA, the Digital Services Act, received consensus among the European Parliament and EU member states over the weekend. The suite of legislative measures, against which the world’s biggest technology companies lobbied bitterly, represents the most significant overhaul of the laws governing their continental Europe operations in more than two decades.
EU’s competition commissioner Margrethe Vestager was the key architect of the bloc’s digital reforms, and she reckons that the Digital Services Act is “better than the proposal that we tabled” back in 2020. She also proclaimed in a tweet that “Democracy is back.” European Commission President Ursula von der Leyen, on the other hand, called the agreement “historic.”
Ta da! 16 hours, lots of sweets (but cookies still declined 😉 We have a deal on the #DSA: The Digital Services Act will make sure that what is illegal offline is also seen & dealt with as illegal online – not as a slogan, as reality! And always protecting freedom of expression! pic.twitter.com/mUhU84Q9FS
— Margrethe Vestager (@vestager) April 23, 2022
“The DSA will upgrade the ground rules for all online services in the EU,” the president said. “It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses.”
What makes up the Digital Services Act?
First and foremost, the wide-ranging Digital Services Act can fine a company up to 6% of its global turnover for violating the rules, according to the European Commission (EC), while repeated breaches could result in a tech firm being banned from doing business in the EU. “The DSA follows the principle that what is illegal offline must also be illegal online. It aims to protect the digital space against the spread of illegal content, and to ensure the protection of users’ fundamental rights,” the statement reads.
The new rules will come into force in 2024, a year after DMA, and would include: banning advertising aimed at children or based on sensitive data such as religion, gender, race and political opinions; and allowing EU governments to request the removal of illegal content, including material that promotes terrorism, child sexual abuse, hate speech, and commercial scams.
It would also force social media platforms to allow users to flag illegal content in an “easy and effective way” so that it can be swiftly removed. For online marketplaces like Amazon, it will need similar systems for suspect products, such as counterfeit sneakers or unsafe toys.
The obligations introduced are proportionate to the nature of the services concerned and tailored to the number of users — meaning that very large online platforms (VLOPs) and very large online search engines (VLOSEs) will be subject to more stringent requirements, the Commission said. Services with more than 45 million monthly active users in the EU will fall into the category of very large online platforms and very large search engines.
“To safeguard the development of startups and smaller enterprises in the internal market, micro and small enterprises with under 45 million monthly active users in the EU will be exempted from certain new obligations,” the EC noted. Other measures include requiring large online platforms and online search engines to take specific measures during a crisis, a move triggered by the disinformation that followed along with Russia’s invasion of Ukraine.
“The Digital Services Act (DSA) will help hold big tech companies accountable for illegal content – such as deepfakes – posted on their platforms. Our research shows nearly 1 in 6 consumers worldwide worry about their personal data being used to create deepfake videos, a key reason why a mere 7% say they trust social media companies to keep their data safe,” commented Terry Ray, the SVP and Field CTO at Imperva. “Consumer anger at how their personal data is being misused is real and it’s one of the key drivers why we should expect to see legislation like the DSA come into force around the world.”
The EU is not alone in targeting the tech giants operating in Europe. There have, in fact, been numerous political and regulatory actions against online platforms in various regions around the globe. For instance, the UK is introducing the Online Safety Bill, which imposes a duty of care on tech firms to shelter users from harmful content. In the US, the Justice Department and Federal Trade Commission have filed antitrust actions against Google and Facebook, and are also pushing for a piece of legislation to rein in the tech giants.