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EU Digital Services and Digital Markets Acts: Europe's big tech regulation overhaul begins

The two pieces of proposed legislation will dictate how the EU regulates Big Tech for years to come.

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The European Commission announced the Digital Services Act and the Digital Markets Act on Tuesday.

Omar Marques/SOPA Images/LightRocket via Getty Images

The European Commission unveiled two major pieces of legislation on Tuesday that could dictate how tech companies are regulated in Europe in the coming years. The Digital Services Act and Digital Markets Act, which were originally expected at the beginning of December, were unveiled by Commissioners Thierry Breton and Margrethe Vestager during a press conference in Brussels.

Together the pair of acts propose a set of new rules for all digital services, including social media, online market places and other online platforms. They are designed to boost competition across the bloc, while also keeping users safe from the many harms they can potentially encounter online.

Large tech companies could face fines of up to 10% of their global revenue -- potentially reaching billions of dollars -- for breaking the rules. They will also face limits on how they can expand in Europe. EU regulators will be granted powers to break up companies, but both Vestager and Breton have expressed on multiple occasions that this would be a last resort, with Breton adding on Tuesday there was no such thing in Europe as a company being "too big."

The proposals, which could take years to pass into law, arrive at a key moment in the global regulation of tech. Earlier on Tuesday, the UK released its own proposals for preventing online harms. Meanwhile in the US, conversations about whether to break up large tech companies are ongoing. 

Europe has long taken the lead in efforts to rein in big tech, but has yet to successfully balance regulation with creating an environment in which its own digital economy can blossom. It's now seeking to maintain its reputation for regulation leadership by updating and redefining its rules, while creating an appealing level playing field for tech businesses to flourish.

"The two proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online," said Vestager in a statement. "And that businesses operating in Europe can freely and fairly compete online just as they do offline."

The Digital Services Act, or DSA, will apply to all digital services operating across Europe and includes rule on:

  • The removal of illegal goods, services or content from online platforms
  • Providing recourse for users whose content has been mistakenly deleted by platforms
  • Large platforms preventing abuses of their systems
  • Transparency measures covering algorithms and online advertising
  • Allowing researchers access to key platform data for the purposes of scrutiny
  • Ensuring sellers of illegal goods and services can be traced and tracked down
  • Cooperating with public authorities to ensure effective enforcement

The second piece of legislation, the Digital Markets Act, or DMA, will only apply to big companies that are seen as "gatekeepers." It is designed to ensure that tech giants operating in Europe do not prevent news services, tools and companies from entering the market.

The Commission didn't name the companies that will be subject to the DMA in its proposals, but gave some idea of the criteria that will be used to define gatekeepers. They will include companies exceeding a European market revenue of 6.5 billion euros, being present in at least three countries and having at least 45 million active users per month.

Companies of this size will be prevented from pushing and prioritizing their own products and services ahead of others. Such situations -- for example, Google giving preference to its own shopping services in search -- have resulted in significant antitrust investigations and fines in Europe.

"With today's proposals, we are organising our digital space for the next decades," said Breton. "With harmonised rules, ex ante obligations, better oversight, speedy enforcement, and deterrent sanctions, we will ensure that anyone offering and using digital services in Europe benefits from security, trust, innovation and business opportunities."

The DSA and DMA are major pieces of EU legislation, but expect it to be many years before they come into force. Europe's legislative process is complex and time-consuming, and before they pass into law there will be likely be many years of negotiations.

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