The EU parliament has voted through two pieces of legislation with the aim of leveling the tech industry playing field in Europe: the Digital Markets Act and Digital Services Act.
According to EU lawmakers, these acts will address how the digital landscape is dominated by specific platforms that not only have a significant advantage over their competitors, but also wield a worrying influence over democracy, society, the economy, and fundamental rights. Essentially, from the EU’s perspective, these companies have become gatekeepers of choice on the Internet, determining future innovations and what consumers have access to. Because of this influence, it’s getting more difficult for small and medium-sized companies with alternative digital business models to emerge.
To counteract this undue influence, both acts will upgrade the regulations that govern digital services, creating a single set of rules that will be applicable EU-wide.
Read on to find out what each of these acts entails.
The Digital Markets Act
The purpose of this act is to set out criteria for establishing industry gatekeepers and to create a list of “dos” and “don’ts” for big digital platforms to prevent them from imposing unfair conditions on both consumers and businesses. These are companies that provide what are referred to as “core platform services”, including operating systems, social networks, search engines, and online advertising services. Under these rules, such platforms would not be allowed to include pre-installed software with their product that cannot be uninstalled by users. Another example is companies that offer both their own services and third-party services on their platform will not be allowed to automatically rank the services they provide as higher than the third-party services.
It is hoped that these efforts will help smaller companies compete with larger ones, as well as increase innovation, growth and competitiveness across the industry.
The Digital Services Act
The aim of this legislation is to protect fundamental human rights online and create safer digital spaces for both companies and consumers. Its core concerns are tackling the algorithmic spread of disinformation online and the trade and exchange of illegal goods and services. This includes protecting users from harmful and illegal content, as well as counterfeit goods and products that don’t meet the EU’s health and safety standards.
While this will come as a blow to some big tech companies, for consumers and small, and medium-sized businesses, this is a welcome development. When you consider that 90% of the upwards of 10,000 digital platforms operating in the EU are small and medium-sized businesses, the undue influence of a small minority of larger companies becomes even more stark. Hopefully, these acts will indeed accomplish a more level playing field.