EU Member States agreed to The Digital Markets Act and The Digital Services Act

02 December 2021

At the formal meeting of the Competitiveness Council on November 25, 2021, a position was adopted (i.e. general approach) on the proposal for a Digital Markets Act and a Digital Services Act, which should provide individuals and businesses with a fairer and safer digital environment.

Proposals of both acts were presented by the European Commission at the end of last year in response to new digital challenges (proliferation of counterfeit goods, hate speech, cyber threats, etc.) under the Digital Services Package. Before their final adoption, negotiations with the European Parliament will take place, which is expected to happen in the first half of next year.

Digital Markets Act (DMA)

The Digital Markets Act will create a level playing field for all businesses, which means that smaller business users who depend on large platforms (i.e. gatekeepers) will find it easier to compete with the latter. If large platforms have so far been able to abuse their role as intermediaries between providers and users due to their market position, the new Act provides for certain obligations and prohibitions that they will have to comply with, allowing fair competition, greater choice for consumers and fairer prices of services and products.

Gatekeepers will need to, among other things, allow their business users to access the data that they generate in their use of the gatekeeper's platform, allow them to promote their offers and conclude contracts with their customers outside the platform, as well as provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their independent verification of their advertisements hosted by the gatekeeper.

At the same time, gatekeepers may no longer treat services and products offered by them more favourably in ranking than similar services and products offered on the platform by third parties, they may no longer prevent consumers from linking up to businesses outside their platform or prevent users from un-installing any pre-installed software or app if they wish so.

Consequences of non-compliance with the rules may result in fines of up to 10% of the company's total worldwide annual turnover, periodic penalty payments of up to 5% of the average daily turnover or additional legal remedies in case the gatekeepers systematically violate their obligations.

The Digital Markets Act will bring harmonised rules for the whole European Union and will be implemented uniformly by the European Commission.

Digital Services Act (DSA)

On the other hand, the Digital Services Act introduces a comprehensive set of new rules that all online intermediaries offering their services in the single market will have to comply with, whether they are established in or outside of the EU. New rules will give citizens more choice and lower prices, less exposure to illegal content and better protection of fundamental rights, they will give legal certainty and easy start-up or scale-up in Europe for providers of digital services and for business users of digital services better access to EU-wide markets through platforms.

The new rules cover intermediary services (Internet access providers, domain name registrars), hosting services (cloud and webhosting services), online platforms (online marketplaces, app stores, social media platforms) as well as very large online platforms (those reaching more than 10% of consumers in Europe) - special rules are foreseen for the latter, as they pose particular risks in the dissemination of illegal content and societal harms.

The new Act therefore provides for measures to counter illegal goods, services or content online; new obligations on the traceability of business users (identification of sellers of illegal goods); effective safeguards for users; transparency measures for online platforms; obligations for very large platforms to prevent the misuse of their systems; access for researchers to key data of the largest platforms in order to understand online risks; and an oversight structure that addresses the complexity of the online space.