The European Commission, led by President Ursula von der Leyen, took up its mandate stating that it wished to tackle the biggest questions in regulating the digital economy, namely through a Digital Services Act to update existing rules, some of which have not been touched for 20 years.
As part of this work the Commission has released roadmaps with options for intervention and consultations covering three areas:
The previous European Commission started working on these areas, yet interventions were either non-legislative or focused on increasing transparency and learning opportunities rather than prescriptive rules of behaviour. The DSA will take a much more interventionist approach.It will have broad implications for corporates which offer services within the EU and the consultation touches on specific sectors such as on-demand services and online advertising.
There may well be knock on effects in other jurisdictions wrestling with the same questions. The EU’s leadership (or militancy) in regulating the tech sector has been well established in recent years, and the progress of the DSA will be closely watched elsewhere.
Corporates have different ways to provide comments. Consultations on the three roadmaps above are open until 30 June, whilst longer questionnaires with broader questions on the Digital Services Act and the New Competition Tool, are open until 8 September.
The approach taken by the European Commission is to build on the Platform to Business Regulation (‘P2B’) which is about to enter into force in EU Member States. The P2B Regulation introduced transparency requirements for online platforms and how they provide their intermediation services between businesses and consumers. Importantly, P2B did not define rules about how platforms treat business users (such as ranking practices, data access policies, unfair contractual provisions etc) but focused on transparency instead.
The DSA would build on these requirements and the Commission sets out a series of options which could be overseen by a dedicated regulatory body at EU level:
The P2B Regulation was always intended as a stopgap measure before further action and its wide scope was underappreciated by several corporates who did not see themselves as intermediaries. Measures in the DSA will follow the same themes and scope whilst allowing greater intervention.
Also important for the direction of travel is the Observatory on the Online Platform Economy,which the Commission set up in 2019 to consider these approaches and scan for areas requiring intervention. Their interim reports on data access and differentiated treatment are due to be published this year and will feed into work on the DSA.
The second issue at hand is how content is shared on a swathe of digital services, including social media platforms, search engines, video gaming platforms, online marketplaces and other information society services and internet service providers.
The question of online content is not new and is a recurring dilemma created by the cornerstone of the EU’s digital regulatory environment: the E-Commerce Directive (‘ECD’). The Directive includes an exemption from liability for digital services hosting illegal content unless they are aware of the content, effectively disincentivising proactive content moderation measures.
This issue was given headline coverage recently when US President Donald Trump signed an executive order which could undermine similar liability exemptions for companies (granted by Section 230 of the 1996 Communications Decency Act) in the US in response to his feud with Twitter.
The Commission roadmap is vague here and outlines many options which could be incorporated into the DSA:
How content is shared online is one of the hardest issues currently facing policymakers and finding balance will be difficult. We can expect recurring debates about how illegal content is defined, free speech vs hate speech, how such measures could be used by repressive governments to muzzle their opposition, and whether private companies should be shouldered with the responsibility at all.
There are existing policy initiatives which show where the Commission may turn to for inspiration. For example, the above 2018 Recommendation on illegal content included a call for frameworks allowing public authorities to notify digital service providers about illegal content, and mechanisms to contest the decision where the service provider takes down the content in question. Going a step further, a proposed Regulation preventing the dissemination of terrorist content attempted to require service providers remove content within a specified time window and for them to take proactive measures, such as applying automated content moderation tools.
In short, the liability exemption of the ECD is the most hotly debated element here and will be where the EU potentially diverges from other jurisdictions. The EU approach could also affect how the UK deals with illegal content. The UK Government has been working on a full response to its consultation and White Paper on Online Harms, which is expected later in the year. Ministers and officials will be mindful of how the UK diverges from or aligns with the EU approach.
Lastly, the European Commission is considering a New Competition Tool that will allow it to intervene early in markets where they feel that traditional competition policy fails to produce desired outcomes. The Commission has identified a list of behaviours it wishes to address, including: tacit collusion between companies, the effects of algorithm price monitoring and ‘tipping’, whereby dominance in one market is used to leverage entrance into another. Two broad options are outlined:
This would likely be a controversial move and would broaden the scope of the European Commission’s powers. The tool would not involve findings that a company has infringed competition rules per se, but instead be based on a yet to be defined test.
The key debate will be on the thresholds required to designate a company as dominant or a market as requiring early intervention, and there will be opposition from those who already feel that competition policy is becoming too interventionist.
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