The Digital Markets Act¹Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) (availiable here) (DMA), which came into force on 1 November 2022, has been joined by the Digital Services Act²Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) (availiable here) (DSA). The main purpose of the DMA is to ensure a fair and open digital marketplace, while the DSA makes digital platform operators more accountable, with the aim of increasing the level of protection of users' online rights. Below we outline the main changes introduced by the two Acts.

I. The digital Services Act (DSA)

The DSA will regulate all online platforms and social networks which offer their services in the EU's single market. The purpose of the Act is to improve methods for removing illegal content, reducing the spread of hate speech and disinformation, and to give online platforms a greater responsibility to protect users. This is based on the principle that whatever is illegal in the real world should also be illegal online. Accordingly, online platforms will have to take on a greater responsibility to protect users and companies. The two main objectives are: (1) to create a safe online environment and (2) to protect rights online, in particular freedom of speech. This will primarily be done by increasing the transparency of targeted advertising, data collection and the operation of algorithms. The new regime will also provide greater protection for companies by making the internet more predictable and thus allowing more opportunities for innovation which will result in the increasment of competitiveness. Network operators will also face changes, as they will have to allow access to their data.³ The Government Office for Digital Transformation: The Act on Digital Services entered into force, gov.si., 16.11.2022.

Below, we highlight some of the key changes introduced by the provisions of the Act. The application of the Act is already an important issue, as it will apply to intermediary services offered to users of services established or located in the EU, regardless of where the providers of those services are established. Due diligence obligations will be imposed to ensure a transparent and secure online environment. For example, providers will be required to designate a single point of contact for communication with Member State and EU authorities. It will also be mandatory to allow service users a direct and rapid communication by electronic tools (in a user-friendly manner), including by allowing service users to choose means of communication that do not rely solely on automated tools. Providers of intermediary services who are not established in the EU but offer services in the EU will have to appoint in writing a natural person or a legal entity to act as their legal representative in one of the Member States in which the provider offers services. At least once a year, it will be compulsory for service providers to publish publicly (in an accessible way) clear, easy-to-understand reports on all content moderation that they have carried out during the relevant period. Other specific provisions introduced by the Act include: the prohibiton to provide service to users who frequently publish blatantly illegal content; the protection of minors online; transparency reporting obligations for online platform providers and other measures. We would also like to point out that the Act explicitly provides regulation for very large online platforms and very large online search engines, which it defines as those with an average of at least 45 million active monthly users of the service in the EU.
Compliance with the Act will be supervised by a non-exclusive body, the Digital Services Coordinator, which will be set up jointly by the European Commission and the Member States. The deadline for the entry into force of the Regulation is 16 February 2024 and the implementation of the Regulation is the responsibility of the Government Office for Digital Transformation.⁴The Government Office for Digital Transformation: The Act on Digital Services entered into force, Iusinfo, 16. 11. 2022.

II. Digital Markets Act (DMA)

The purpose of the Act is to regulate the status of gatekeepers who control at least one core platform service (e.g. a search engine, social network, operating system, online marketplace) and who have many users in several EU countries. The criteria dictated by the Act are the following: (i) the company has a strong economic position, has a significant impact on the internal market and is active in several EU countries; (ii) the company has a strong intermediary position, which means that it connects a large user base to a large number of companies; (iii) the company has (or will have in the near future) a strong and stable market position. The condition that the gatekeeper has been stable over time will be met if the company has fulfilled the first two criteria in each of the previous three business years.⁵European Commission: Digital Markets Act: ensuring fair and open digital markets.

This ensures a more just business environment for business users who depend on gatekeepers to provide their services. By removing unfair conditions, innovators and technology start-ups will have new opportunities to compete and innovate online.

The benefits of the Act for consumers are (i) fairer prices; (ii) more opportunities to switch providers; (iii) more choice and direct access to services. Unfair practices towards business users and customers dependent on them with the aim of gaining an unjustified advantage are prohibited. In doing so, gatekeepers will retain all opportunities to innovate and offer new services.

In practice, this means that gatekeepers will be obliged to (i) provide their business users with access to the data they generate when using the gatekeeper platform; (ii) allow third parties (in exceptional cases) interoperability with the gatekeeper's own services; (iii) allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform; and (iv) provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper.

In addition to obligations, the new rules will also impose certain prohibitions. For example, it will no longer be permissible to (i) prevent consumers from connecting with businesses outside the their platforms; (ii) treat services and products offered by the gatekeeper more favourably than those offered by third parties on the gatekeeper's platform. It will be prohibited to (iii) prevent users from un-installing any pre-installed software or applications if they wish so. It will also be prohibited, (iv) in the absence of effective consent, to track users outside the gatekeepers' core platform for the purposes of targeted advertising.

The implementation of the Digital Markets Act will be the sole responsibility of the European Commission.The Commission will carry out market investigations to identify gatekeeper companies and update gatekeeper obligations and introduce appropriate measures to eliminate systematic violations of the Act. In the case of violations of the rules, fines (in the amount of up to 10% of the company's total global annual turnover or in the case of repeated violations up to 20%), periodic penalties (in the amount of up to 5% of the average daily turnover) and possible additional legal remedies in the case of systematic violations are foreseen. Non-financial measures are also possible, such as the sale of (parts of) the company.

The aim of the Act is to protect small and medium-sized technology companies by harmonising regulation at EU level, thus enabling them to operate in a fairer economic and technological environment. This means that platforms such as Google, Facebook, Apple will be prohibited from engaging in unfair business practices or otherwise hindering other providers in the digital market. Another objective is to give smaller players fairer access to the market and to give them more opportunities to develop their services, thereby increasing their competitiveness and innovation.⁶The Government Office for Digital Transformation: The Act on Digital Markets entered into force, Iusinfo, 16. 11. 2022.
It will also provide greater protection for natural persons, as it will no longer be possible to collect and sell data generated by web browsing or the use of various applications without explicit consent. Another important objective is to increase the number of applications and online services. As a consequence, prices will also fall due to increased competition.⁷The Government Office for Digital Transformation: The Act on Digital Markets entered into force, gov.si, 4. 11. 2022.