Digital Brief: DSA fourth trilogue, DMA diverging views, France’s fine for Google

The Digital Brief is EURACTIV's weekly tech newsletter.

Welcome to EURACTIV’s Digital Brief, your weekly update on all things digital in the EU. You can subscribe to the newsletter here

 

“Step by step we are getting closer to a deal. Still issues we don’t agree on, but hopefully we soon do? A more safe online environment for citizens, consumers, businesses and democracy is the aim. I am confident that we will deliver.”

-Christel Schaldemose, European Parliament’s rapporteur for the Digital Services Act (DSA)

 

Story of the week: EU co-legislators agreed ‘in principle’ on a ban on adverts targeting minors and utilising sensitive data, in the DSA. The EU Council accepted this inclusion in the text as part of the broader package deal on the Digital Markets Act. Still, the proposed compromised text revealed by EURACTIV left the Parliament and NGOs unsatisfied as the part on sensitive data merely referred to the GDPR. Moreover, the Council’s text included these provisions in the recitals, whereas lawmakers want it in an article. The European Commission offered to draft a new compromise. Still, Parliament’s leading negotiator Christel Schaldemose slammed the EU executive’s previous text as unsatisfactory and put it on MEPs to come up with a proposal possibly as soon as next week.

Schaldemose got through her proposal on recommender systems, but everything else was sent back to the technical level, including dark patterns. The part on risk assessment got blocked, and the Commission is now working on a new compromise. Although the waiver system will likely get killed in the end, centre-right MEPs are standing in asking for exemptions for SMEs, even though left-to-centre lawmakers are actually closer to the Council position than theirs. In terms of supervisory fees, the Commission estimated it would total around €20 or €30 million, which seems to suggest €1 million per very large online platform since 20/30 VLOPs are expected in total. The crisis management mechanism will include a sunset close as a safeguard against what was considered excessive executive power by the European Commission. No technical meeting has been scheduled for next week (plenary) or the following one (green week). The most likely date for the next trilogue seems to be 27 April, but it is yet to be confirmed.

 

Don’t miss: Last week, EURACTIV’s revelations on the last-minute amendment for extending FRAND conditions to the remuneration of digital content sounded the alarm bells for EU lawmakers, who successfully pushed back against the initiative. Still, not even a day passed from the agreement before different opinions amongst DMA co-legislators surfaced on what the final text on FRAND will mean for publishers. For the French government, “Remuneration is not written in the text but is part of the concept of FRAND in general,” Cedric O’s office told EURACTIV. For MEPs, FRAND terms do not apply since it is the rightsholder that makes access to its content dependent on payment. Meanwhile, the Commission has so far kept an ambiguous position. Read more. 

 

Also this week

  • Google was fined €2 million in France over unfair contractual obligations for developers
  • DMA is in the spotlight of competition regulation
  • The crypto community aggressively targeted MEPs over transparency obligations for crypto transactions
  • Yandex’s taxi service was banned in Estonia, and Tallinn is now pushing for an EU-wide ban

 

Before we start: Last week, the EU co-legislators reached an agreement on the Digital Markets Act (DMA), landmark legislation targeting the largest tech companies. We discuss the key points of the file with the European Parliament’s rapporteur Andreas Schwab.

DMA: the rapporteur’s take

Last week, the EU co-legislators reached an agreement on the Digital Markets Act (DMA), landmark legislation targeting the largest tech companies. We discuss the key points of the file with the European Parliament’s rapporteur Andreas Schwab.

Competition

Concerning lack of concern. Fifteen companies and organisations have written to EU competition chief Margrethe Vestager to express concerns over the Commissioner’s statement this week that it had no concerns over competition abuses in the cloud market. The signatories argue that the European cloud market is currently dominated by a small number of US-based service providers, and the Commission’s adoption of what it describes as a “very neutral stance” is sending the wrong message. Instead, they call for stronger policies enshrined in law, to facilitate the rebalancing of the EU market.

Cybersecurity

Cyber vulnerable. EU institutions are underprepared to deal with the increasing volume of cyberattacks, according to a report by the European Court of Auditors published this week. The institutions are “attractive targets” for attackers, the report says, but finds their resilience lacking, despite the Commission’s pledge to bolster it. To address the issue, measures such as the introduction of more binding rules, improving emergency response resources and strengthening inter-institutional cooperation should be taken. Read more.

Mind your antivirus. As soon as the day after Russia’s invasion of Ukraine, the US government began warning American companies that Moscow could manipulate software from Russian cybersecurity provider Kaspersky. US officials have warned that sanctions against Russia could increase the risk of cyberattacks and that Moscow could use the software to establish remote access to devices. It’s not the first time Kaspersky, the founder of which the US says is a former Russian intelligence officer, has been singled out as a particular threat. In 2017 and 2018, the Trump administration banned its software from government systems and warned companies against using it. Read more. 

Data & privacy

Action plan ready. Advertising organisation IAB Europe has submitted an action plan outlining how it will respond to the Belgian data protection authority’s decision earlier this year that IAB Europe’s Transparency & Consent Framework (TCF) violated the GDPR, warranting a €250,000 fine. The organisation is appealing the decision but says that the action plan is part of a broader move to ensure a more compliant TCF. Meanwhile, IAB Europe has also appealed the DPA’s decision before the Belgian Market Court.

Data framework in question. Two S&D MEPs have raised concerns about the proposed Transatlantic Data Privacy Framework, a political agreement for a new EU-US initiative announced last week during US President Joe Biden’s trip to Brussels. Priority questions tabled by the lawmakers, Paul Tang and Birgit Sippel, outline concerns that, given the sensitive times with the Ukrainian war at Europe’s doorstep, the deal represents a “trade-off between fundamental rights and economic interests” on the part of the Commission and ask what steps will be taken to ensure that the framework heeds the European Court of Justice’s previous rulings on the US’ data privacy inadequacy.

Inquiry takes shape. MEP Sophie in’t Veld was this week nominated as rapporteur for the Parliament’s Pegasus inquiry committee by the Renew group – which proposed the inquiry in the first place. The investigation is set to look at the use of the spyware in Europe after it emerged last year that it had been deployed against high-ranking politicians, journalists and others. The inquiry will, in particular, examine the governments alleged to have purchased the tech. So far, Hungary and Poland are known to have done so, but lawmakers have noted that the list may well expand as the inquiry gets underway. The constitutive meeting of the inquiry committee is set for 19 April, and the political agreement entails the EPP to express the committee’s chair.

Disinformation

More postponements. The finalisation of the Code of Practice on Disinformation has been postponed in light of the crisis in Ukraine, as signatories say they need more time to incorporate actions that can tackle disinformation linked to the war. The code is being revised based on feedback from a Commission review. Initially supposed to be completed by the end of 2021, the process was extended to March 2022 but will now be pushed back again as the code’s current and prospective signatories are heavily involved in taking urgent action to limit disinformation related to the war in Ukraine, the Commission says.

Digital currencies

Crypto bros’ offensive. Hundreds of emails were sent to EU lawmakers by members of the crypto community ahead of a key vote this week on transparency and traceability requirements on crypto transfers. US crypto company Coinbase mobilised its users to email MEPs to oppose the legislation, which it described as a “surveillance regime”. The core issue is that the EU lawmakers want crypto transactions not only to be accompanied by the payers’ and payees’ information, but also for that information to be verified. The result would be a crackdown on unhosted wallets, which are seen as the real problem allowing terrorists and criminal organisations to move money around and re-enter the regular financial system. Despite this pressure, all compromise amendments were adopted on Thursday in the ECON and LIBE joint report. Read more.

Digital Markets Act

What now. Everyone is waiting for the last four-column. According to an internal email seen by EURACTIV, the final document will be shared “asap and at the very latest by 19 April.” A technical meeting internal to the Parliament is scheduled for Tuesday (5 April) to explain the next moves in detail. Meanwhile, policymakers, regulators and lawyers gathered in Brussels for the CRA competition conference, where the DMA was at the centre of the discussion.

Enforcement, enforcement, enforcement. Needless to say, the European Commission is now expected to deliver on the very high expectations the DMA has generated. Internal market commissioner Thierry Breton ensured that the Commission will be ready and is already building the team. The new hires are expected to range between 100 and 120 employees, including lawyers, engineers and data scientists, the French commissioner said, noting that new skills were needed to audit platforms’ algorithms. The statement goes against what had been said just minutes before by the Commission’s chief economist Pierre Régibeau, who stressed that whoever is in charge of the DMA is likely to be shorthanded in the first few years due to budgetary constraints. Still, the figures envisaged by Breton are not at the level Schwab called for of 220 new hires.

Killer acquisitions. Pierre Régibeau also pushed back on the notion that the Commission has not done enough to stop Big Tech companies from consolidating their market positions with acquisitions and asked those who were not happy to come up with a list of mergers where the EU executive should have done more. The role of acquisitions in tipping the balance in favour of tech giants was also highlighted by Rod Sims, the former chair of the Australian antitrust regulator.

Authorities’ competition. Andreas Mundt, president of Germany’s powerful Bundeskartellamt, stressed that the DMA would need to be complemented by the work of national competition authorities, notably on those cases that have a national impact or that have low priority for the European Commission. Mundt went as far as criticising the DMA obligations for not being flexible enough to capture future anti-competitive practices while praising Germany’s competition law as more flexible and already at an advanced application stage. The not-so-subtle tensions prompted fellow German Andreas Schwab to call for avoiding a “competition of competition authorities.”

The crux of the matter. “The key issue will be with the ECN [European Competition Network and the Commission to establish a good cooperation system on the DMA,” said the former head of the French competition authority Isabelle de Silva. Moreover, for de Silva, another determining factor will be the response of the gatekeepers, namely if they will proactively comply with the regulation or push back until the end.

Expect court cases. “There will be litigation around the DMA. The companies will dispute the gatekeeper designation. They will dispute the interpretation of the DMA obligations to a large extent. Of course, they will claim that the obligations in certain cases are disproportionate,” warned Andreas Mundt. Marc van der Woude, president of the EU General Court, echoed this prediction, noting that several aspects of the DMA were open to legal challenge.

Digital Services Act

Search engines obligations. A Commission non-paper shared with diplomats this week outlines the best approach to including search engines in DSA obligations, proposing a potential separate article with specific rules to cover them. The non-paper addresses concerns that search engines could slip through the DSA, noting that they do not correspond exactly with other categories and offering a new definition. The proposal is based on France’s idea of making search engines a fourth service category, on top of the three introduced with the eCommerce Directive. Read more.

Trusted NGOs. Twenty-one civil society organisations have published a call for NGOs to be allowed to become trusted flaggers – bodies that identify illegal content online – under the DSA. To allow a wider group of organisations to perform the function, the signatories call on lawmakers to take two key actions: removing reporting obligations for trusted flaggers and allowing the Commission to award the status independently from Digital Service Coordinators.

eCommerce

eCommerce inquiry. Germany’s competition authority has launched an inquiry into “scoring” practices in the online retail sector, examining retailers’ practices of conducting credit checks on consumers, often without their knowledge. Shortcomings in terms of transparency and consent, the Bundeskartellamt warns, could equal violations of consumer protection law. Before publishing its conclusions, the watchdog will survey around 50 online retailers and credit bureaus.

Industrial strategy

Falling short. A significant acceleration of digitalisation efforts will be needed if the EU is to meet its Digital Decade goals, according to a new report commissioned by Vodafone. While some progress has been made, greater efforts are needed in areas such as digital skills and the digital intensity of businesses if the 2030 targets, released by the Commission last year, are to be met. However, regardless of the challenge this presents, Vodafone’s Chief External Affairs Officer told EURACTIV that policymakers must not respond by compromising on their objectives. Read more.

Buy European. Directing more public procurement towards European digital actors has emerged as one area in which candidates for the French presidential election agree. With the campaign’s focus on sovereignty, the “Buy European Act” has gained much support amongst contenders, as they emphasise the need to bolster Europe’s tech base in order to stand a chance of fighting with American or Chinese giants on comparable terms. Read more.

Rapporteurship agreements. The lead of the Data Act was assigned to the Parliament’s EPP group this week, with MEP Pilar del Castillo appointed rapporteur for the ITRE committee and the S&D’s Miapetra Kumpula-Natri as the shadow. The Chips Act was given to the S&D, to be led by Dan Nica as ITRE rapporteur. The EPP’s Eva Maydell will be the ITRE shadow rapporteur and will also lead the ECON committee’s opinion report on the bill.

Media

Hungarisation of Greece. Six international press freedom organisations published a report this week raising concerns over what it describes as the “systemic press freedom crisis” in Greece and accusing New Democracy, the country’s ruling party, of attempting to control the media and minimise dissenting voices. Speaking to EURACTIV, the head of the EU/Balkans desk at Reporters Without Borders warned that the press freedom situation in Greece “is becoming comparable to the one in Hungary”, comments echoing those made last month by Greek MEP Giorgos Kyrtsos, who was expelled from New Democracy as a result. Read more.

Independent media on hold. Novaya Gazeta, Russia’s top independent newspaper, suspended its publication this month following the passage of a law that prohibits the spread of “false information” about the invasion of Ukraine, including describing it as a war. The paper’s chief editor, Dimitry Muratov, who last year won the Nobel Peace Prize for his work in defence of press freedom, said publication would be halted until the end of what the Kremlin describes as its “special operation” in Ukraine in order to protect its staff and avoid a total shut-down. Read more.

Better go now. The number of Russian journalists fleeing the country is comparable to the numbers that left under the Bolshevik regime, the director of Reporters Without Borders (RSF) told EURACTIV this week, calling on the EU to take concrete action. RSF is currently mobilising to help journalists in Ukraine but regrets the EU’s decision to implement sanctions against Kremlin-backed media outlets RT and Sputnik rather than tackling them with a framework of media regulation. Read more.

Bloody war reporting. Reporting on the war in Ukraine is becoming an increasingly deadly job. Media organisations are ramping up efforts to provide journalists with training and equipment to offer some level of protection but covering all those on the ground is a costly and logistically challenging task. Many Ukrainian journalists have also had to flee their homes, meaning that relocation and evacuation plans are needed, along with establishing reporting centres elsewhere in the country. Read more. 

Platforms

More app store fines. Google has received a €2 million fine for what a French court said are the “significant imbalances” the company has created with app developers. In 2018, French Economy Minister Bruno Le Maire launched a suit against both Google and Apple, alleging that the two tech giants had imposed a number of unfair clauses on developers without effective negotiation and seeking a “cessation of their abusive commercial practices”. Google told EURACTIV that it was “disappointed” at the court’s decision and left the door open to a potential appeal. The company now has three months to address the concerns covered by the ruling. Read more. 

Yandex ban. As anticipated by EURACTIV in March, Estonia has banned Russian tech giant Yandex over concerns that it was sharing user data with Kremlin security services. The platform, however, has been left off of EU sanctions lists, something that the Commission has yet to explain, following parliamentary questions put forward by several MEPs. The ban is national at the moment, but Estonia’s goal, an official told EURACTIV, was to make it EU-wide. Tallinn referred the matter to the EU executive, and it is putting pressure to make sure Yandex is included in the next round of sanctions.

Stakeholder dialogue. MEP Elisabetta Gualmini met with several stakeholders this week for a closed-door discussion of the EU’s proposed directive on improving labour conditions for platform workers. The demand to join the meeting was reportedly so high that a second discussion has been scheduled for 12 April, ahead of the report’s expected publication at the start of May. At the meeting, trade unions argued that the criteria proposed by the European Commission to qualify platform workers as employees are not future-proof and proposed instead to look at the nature of the platform. The platforms did not receive the proposal well and accused trade unions of not caring about eventual job losses but instead maximising their enrolment.

Research & Innovation

R&I optimism. AI, cybersecurity, big data and quantum computing are all areas in which universities see Europe as having global leadership potential, according to a new survey by the European Universities Association, results which align with the EU’s digital policy agenda. Sixty-eight per cent of respondents were optimistic about the potential of Europe’s Research & Innovation capabilities to allow it to achieve leadership in the digital transition and 47% of respondents said up- and re-skilling the workforce would be essential in supporting digital innovation.

Transatlantic ties

Consumer protection framework. The EU and US have launched their informal dialogue on strengthening consumer protection, agreeing to focus on digital markets in areas such as dark patterns and the reliability of reviews. Commissioner for Justice, Didier Reynders and the Chair of the US Federal Trade Commission, Lina Khan agreed to the framework, which will also look at the protection of specific groups, such as children and underserved populations.

Twin transitions

Planned obsolescence. The Commission this week introduced a ban on greenwashing and planned obsolescence and presented new rules on protecting customers against false environmental claims. The new measures will give consumers the right to know how long a product is intended to last and how it might be repaired and will oblige tech companies to inform consumers about any features designed to limit the durability of devices, such as software that stops or downgrades after a certain length of time. Read more.

Sustainable digitalisation. With emissions from France’s digital sector on an upward trajectory, candidates are prioritising climate issues on the campaign trail and urging digital companies to play their part in the green transition. From planned obsolescence to product reuse, contenders from both left and right have given the question of sustainability in digital a central position. Read more. 

 

What else we’re reading this week:

Putin’s hackers gained full access to Hungary’s foreign ministry networks, the Orbán government has been unable to stop them (Direkt36)

As artificial intelligence gets smarter, is it game over for humans? (The Guardian)

The ‘TikTok Intervention’ in the Russia-Ukraine War: How Credible? (Global Tech Outlook)

[Edited by Alice Taylor]

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