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What is the EU’s Digital Services Act package? What are the intended benefits? Why is the big tech industry skeptical?
The EU’s Digital Services Act (DSA) and Digital Markets Act (DMA) are each intended to make the internet safer and more equitable for both end-users and service providers. However, analysts are divided on whether the new laws will have the intended effect.
Read on to learn about the EU’s Digital Services Act package, including concerns identified by analysts.
EU Digital Services Act Package
The EU’s Digital Services Act package recently passed by the European Parliament includes two laws—the Digital Services Act (DSA) and Digital Markets Act (DMA)—aimed at regulating big tech companies for anticompetitive and illegal behavior. With the adoption of these laws, the EU becomes the first region to attempt to regulate the online world, and its rules may become a blueprint for lawmakers around the globe. In this article, we’ll look at the laws and explore why some analysts in the big tech industry are skeptical of their intended benefits.
What Is the Digital Services Act (DSA)?
The EU’s Digital Services Act aims to make the internet safer for users by sheltering them from illegal content and making sure that online companies treat them fairly. The law applies to all platforms that host users’ content, facilitate transactions or communications between users, or provide online services, like search engines. Large companies (those also subject to the DMA) are subject to additional supervision and are required to pay fees that cover the cost of this supervision.
To achieve its aims, the DSA requires platforms to remove illegal content (e.g. illicit goods, copyright infringements) and report it to the government whenever they discover it. (However, it stops short of requiring platforms to search for illegal content, and they’re not liable for it unless they knowingly allow it to remain up.)
The DSA also prohibits companies from designing features in a way that might manipulate users—for example, making the button to refuse an offer hard to see.
What Is the Digital Markets Act (DMA)?
In conjunction with the Digital Services Act, the EU’s Digital Markets Act aims to prevent large online platforms from freezing out smaller players through unfair business practices. Its goal is to create a more competitive playing field in which innovators and tech startups can more easily operate and develop, thus giving consumers more options for services.
The law applies only to digital “gatekeepers,” which it defines as any online services provider that is worth at least 75 billion Euros and provides its services to at least 45 million users per month and 10,000 businesses per year in the EU. It prohibits gatekeepers from restricting what software users can install on their operating systems, thus preventing companies from impeding access to products from other companies. For example, Apple will have to enable iPhone users to install apps from any source, not just Apple’s App Store.
The DMA also restricts how gatekeepers can use data that they acquire from their users and requires them to disclose and explain all their records, practices, and algorithms to government inspectors.
How Has the Big Tech Industry Responded?
Some analysts contend that the laws in the EU’s Digital Services Act package are overdue, and will benefit the digital world by forcing big tech companies to play fair. However, though large tech firms have publicly supported (or remained silent about) the new laws, privately they, along with other industry experts, are raising questions about the feasibility of the regulations—and about the possibility that unintended consequences of the laws might cause more harm than good.
Why Are They Skeptical?
One objection is that strict enforcement in the EU’s Digital Services Act package will stymie innovation. If a company can’t release, for example, new emojis without ensuring they work on dozens of other companies’ products, updates and developments will slow significantly. Another objection is that the laws may weaken security: If forced to allow third-party players to operate on their systems, platforms will be less able to protect consumers from malicious actors—app developers, for example, who mishandle user data or steal sensitive information. This might destroy user trust in the entire digital ecosystem.
Despite possible drawbacks, though, smaller tech companies are largely optimistic about the changes the laws will bring. Spotify, for example, which sued Apple in 2019 for antitrust infringement, has stated that they hope regulators will have the tools and resources they need to enforce the new rules.
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