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The European Commission presented on Tuesday a series of proposals to regulate the digital sector, promote free competition and reduce the dominance of large internet platforms such as Amazon, Facebook and Google, threatening very severe sanctions and even the division of companies in case of infringement. . The proposals represent the largest attempt to regulate the Internet and the digital economy in recent years, not just in Europe.
The proposals were presented by Margrethe Vestager, Executive Vice President of the Commission responsible for digital and competition, and Thierry Breton, European Commissioner for the Internal Market. The new digital rules are divided into two parts: the Digital Services Law (DSA), which aims to regulate security, transparency and access to Internet services, and the Digital Markets Law (DMA), which has as objective Identify, limit and sanction the anti-competitive behavior of the platforms. The new rules, Vestager said, “will bring order out of chaos.”
The proposals reinforce the role of the European Union as a vanguard in internet regulation and are part of the policy of “digital sovereignty” inaugurated by the Ursula von der Leyen Commission. The EU is also trying to confirm itself as the main counterweight to the power of the big US internet platforms, often seen as excessive. An anecdote to describe the climate with which the rules were accepted: a member of Commissioner Breton’s communication team shortly before the presentation of the proposals published a photo of a cartoon in which Vestager and Breton, represented as the peasants in the painting american gothic, stab the Apple, Facebook and Google logos.
It’s time. pic.twitter.com/krl8HTo5SA
– Terence Zakka (@Mr_Zakka) December 15, 2020
Digital Services Act (DSA)
The DSA is primarily concerned with establishing new rules on how platforms should handle “illegal content,” a very broad category that refers, for example, to content that glorifies terrorism or violence against minors, hateful content, but even copyright infringement. The DSA intends to divide digital service providers into several categories, based on their role and size: from brokerage services, such as Internet providers, which have little power in content moderation, to large online platforms such as Facebook and Google, which instead plays a fundamental role in content moderation.
For all these service providers, and increasingly based on role, the DSA includes a whole series of new obligations for the rapid removal of illegal content, and several responsibilities that include guaranteeing institutions much greater access to their internal data. and prepare an annual report on the risk status of your online services. Large platforms will also need to appoint an external auditor to verify compliance with the rules.
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An article in the proposal also states that platforms must provide users with ‘meaningful information’ in real time about the mechanisms that regulate online advertising, explaining why users see one ad and not another. However, it is not clear what is meant by “meaningful information”, as platforms such as Facebook and Google already provide users with some data on how the ads they see are chosen. The DSA also strengthens the power of national regulators and imposes fines that can reach up to 6 percent of the world’s revenue if a large platform violates the rules and fails to act properly against illegal content.
Despite having submitted many ambitious proposals, the DSA does not change the legal immunity that platforms enjoy for content posted by their users (it means that generally if a Facebook user posts illegal content, only the user is responsible and not Facebook). The removal or modification of this immunity is discussed in many countries around the world, including the United States, where President-elect Joe Biden during the election campaign has repeatedly said that he is in favor of its removal. Also on Tuesday, the UK also tabled proposals to regulate content similar to that of the DSA.
Digital Market Law (DMA)
The most ambitious proposal and criticized by the platforms is the Digital Market Act (DMA), which aims to relaunch competition in a sector dominated by large US companies in Silicon Valley. The main point of the DMA is the identification of so-called “gatekeepers” (literally “gatekeepers”), that is, platforms that enjoy a strong position and that can prevent or oppose the entry of new companies into a certain sector, such as social media, cloud computing, online search, messaging, video streaming.
The gatekeepers, according to the DMA, are companies that in one year register revenues in Europe of at least 6,500 million euros, or that have at least 45 million users among the citizens of the Union. Even the smallest companies will be rated as gatekeepers, who may not meet billing and user criteria, but are dominant in specific sectors.
Once defined, gatekeepers will be subject to numerous new rules to prevent anti-competitive behavior, which generally reflects a new attitude: instead of sanctioning ex post and taking lengthy legal action, the Commission wants to act preventively, prohibiting illegal behavior. For example, platforms will not be able to favor their own services in any way to the detriment of those of the competition, which, in various ways, Amazon, Apple and Google are accused of doing so.
Companies that manage application stores, such as Apple, and at the same time sell products in their store, will be obliged to guarantee a fair treatment to the competition, they will have to share much more data than they do now, they will not be able to favor their products and it should guarantee greater access to competition, for example, by allowing the use of different payment and subscription systems. In recent months, several companies, including video game producer Epic and music streaming service Spotify, have accused Apple of anti-competitive practices because it does not allow, among other things, off-platform payments on its App Store.
Guardians who manage operating systems will need to allow users to remove pre-installed applications. Furthermore, when a porter intends to acquire another company, he must inform the European Union and obtain its permission.
– Read also: The European Commission against Apple, again
Violation of the rules could result in very severe penalties, including specific fines that could reach 10 percent of the company’s global turnover (in the case of Google, it would be talking about a fine of 16 billion dollars, in the case of Apple or Amazon of 27-28 billion), or periodic fines corresponding to five percent of daily income. However, if the violations were systematic and a company was fined three times in five years, the EU would move to more drastic penalties, which could lead to the spin-off of the company.
The Vestager and Breton proposals are not yet law and will take a long time to pass. The European Parliament and the governments of the member states will have to intervene in the text, and the legislative process will be long: they are not expected to be final before 2023. There are also numerous elements that are likely to be the subject of close discussion, such as the definition watchdog, which has important consequences and will be highly questioned by platforms, and the question of who will enforce the rules: many powers depend on the antitrust authorities of individual member states, but those of the countries where most of the companies reside in technology, the Ireland and Luxembourg are small and already have problems in the investigation.
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