Dma and Dsa, ok of the European Parliament: tightening on Big tech

Approve the two laws with the rules on the liability of online companies, especially large marketplaces and social media. Transparency on content moderation and algorithms and stakes for gatekeepers between provisions. Focus on closed systems, pre-installed apps and targeted advertising 05 Jul 2022 Patrizia Licata journalist

The European Parliament has definitively approved the new Digital Services Act (DSA) and the Digital Markets Act (DMA), following agreements reached between Parliament and the Council on 23 April and 24 March respectively. The two bills aim to address the social and economic effects of the technology sector by establishing clear rules for how services operate and are delivered in the EU, in line with the fundamental rights and values of the Union. The law on digital services DSA was approved with 539 votes in favor, 54 votes against and 30 abstentions. The DMA Digital Markets Act was approved with 588 votes in favour, 11 votes against and 31 abstentions. Big tech, i.e. very large online platforms and search engines (starting with 45 million monthly users), "with the highest risk", will have to comply with stricter obligations applied by the Commission. These include the prevention of systemic risks (such as the dissemination of illegal content, negative effects on fundamental rights, electoral processes and gender-based violence or mental health) and the obligation to undergo independent audits. These platforms will also have to offer users the option to choose not to receive recommendations based on profiling. They will also need to allow access to their data and algorithms by authorities and licensed researchers. Index of topics • Digital services act: more legality in the online world • Digital markets act: the stakes for gatekeepers • DMA and DSA: sanctions and enforcement • Reactions in Italy and Europe Digital services act: more legality in the online world To address the spread of illegal content, online disinformation and other risks to society, the Digital Services Act (DSA) sets out clear obligations for providers of digital services such as social media or online marketplaces. These obligations are commensurate with the size and risks that the platforms entail and include:

– new measures to tackle illegal content online and an obligation for platforms to react quickly, while respecting fundamental rights, such as freedom of expression and data protection; – strengthening traceability and controls on traders in online marketplaces to ensure the safety of products and services, and a commitment to carry out random checks of the possible reappearance of illegal content; – more transparency and accountability of platforms, for example by providing clear information on content moderation or the use of content recommendation algorithms (so-called recommendation systems); users will be able to challenge content moderation decisions; – the prohibition of misleading practices and certain types of targeted advertising, such as targeting minors and advertising based on sensitive data. So-called "dark patterns" and deceptive practices aimed at manipulating users' choices will also be prohibited. Digital markets act: the stakes for gatekeepers The Digital Markets Act sets out obligations for large online platforms operating on the digital market as 'gatekeepers' ('access controllers', those platforms which, by virtue of their online dominance, are difficult for consumers to avoid), to ensure a fairer business environment and more services for consumers. To avoid unfair commercial practices, entities designated as gatekeepers must: – allow third parties to interact with their services, which means that smaller platforms will be able to ask dominant messaging platforms to allow their users to exchange messages, send voice messages or files from one messaging app to another. In this way users will have a wider choice and avoid the so-called "lock-in" effect, i.e. the limitation to a single app or platform; – allow business users to access the data they generate in the gatekeeper platform, to promote their offers and conclude contracts with their customers outside the gatekeeper platform. Gatekeepers can no longer: – classify its products or services more favourably than those of other market participants (self-facilitation); – prevent users from easily uninstalling any pre-installed software or application, or from using third-party applications and app stores; – process users' personal data for the purpose of targeted advertising, without their explicit consent. DMA and DSA: sanctions and application To ensure that the new provisions of the Digital Markets Act are implemented correctly and in line with the continuous evolution of the digital sector, the Commission may carry out market investigations. If a gatekeeper fails to comply with the rules, the Commission may impose fines of up to 10% of its total worldwide turnover in the previous financial year, or up to 20% in the event of repeated non-compliance. Once officially adopted by the Council, DSA in July and DMA in September, both acts will be published in the Official Journal of the European Union and will enter into force twenty days after publication. The DSA Services Regulation will apply fifteen months after its entry into force or from 1 January 2024 after its entry into force (whichever is the later date). As regards the obligations for large online platforms and search engines, the new rules will apply earlier (four months after their designation by the Commission). The DMA Digital Markets Regulation will start to apply six months after its entry into force. Gatekeepers will have a maximum of six months from their designation to comply with the new obligations. Reactions in Italy and Europe BusinessEurope, the association representing the Confindustrie of Europe, said it supported "the intentions" of the new digital legislation voted by the European Parliament, but stressed that "the essential challenge now is the application and effective impact of these legislative acts. While during the negotiations the spotlight was on Big Tech, this package concerns the digital economy at all levels. The competitiveness of our digital players is at stake. Therefore, ensuring compliance (with the rules) must go hand in hand with the needs and opportunities that lie ahead for small businesses, so that they become the digital leaders of the coming decades." The comment of Gsma and Etno was fully positive, welcoming with particular satisfaction the approach according to which "what is illegal offline should also be illegal online". Telco associations "applaud" the effort made by European authorities to find a balance between preventing the dissemination of illegal material online and respecting fundamental rights "recognising that intermediaries must be responsible in proportion to their role in the dissemination of such material. We are confident that the provisions of the DSA, including measures to tackle disinformation, will help counter the erosion of trust that EU citizens and our societies are experiencing," it said in a statement. The final text of the DMA, the two associations still affirm, reflects the vision of GSMA and ETNO that approve the power assigned to the European Commission to give certain companies the designation of digital gatekeepers, therefore subject to certain obligations and prohibitions as a remedy for possible unfair behavior. Satisfied in Italy Fimi: "After the approval of the Copyright Directive, this new set of rules will contribute to strengthening the online music market and the development of the digital content sector", said the CEO of Fimi, Enzo Mazza, expressing satisfaction of the sector for the result achieved "also the result of the support of the Italian government in the EU Council". I also applaud the IEA and the Fed (Federation of European publishers). In particular, the Italian Publishers Association considers the European Union's choice to impose new obligations on major online platforms, including Amazon, to be very positive. Ricardo Franco Levi, President of AIE and Vice President of FEP, said: "Also thanks to the work of the IEA and the Fed within the European institutions, an important step forward has been taken for the creation of a more balanced and competitive market through the limitation of the overwhelming power of platforms. Of particular importance to us is the obligation to share sales data." The two acts did not meet with the same enthusiastic reception among the associations of the digital world. After the appeals of European cloud providers to Commissioner Vestager and Italian ICT associations to Minister Colao, European e-commerce companies have also moved to ask the EU Commission to intervene to review the definition of user of online commerce services, because EU players could be inadvertently affected by the rules. For Anitec-Assinform, the provisions on targeted advertising could have negative impacts for European companies.