Revealed: Commission ushers in new era of digital regulation

The European Commission will today (15 December) unveil a broad set of regulatory measures clamping down on global digital giants, as part of two landmark texts that will overhaul the operation of the platform economy in the EU.

As part of the Digital Services Act (DSA), a draft of which has been obtained by EURACTIV, platforms will face the prospect of billions of euros in fines unless they abide by new rules across fields including advertising transparency, illegal content removal, and data access.

The Digital Markets Act, meanwhile, will put forward a series of ex-ante prohibitions as well as introduce a ‘market investigation tool’ to detect anticompetitive behaviour across the platform economy.

As for the DSA, penalties for violations of the rules include fines of up to 6% of a company’s annual income and additional sanctions for providing “incorrect, incomplete or misleading information” in reporting obligations or failure to “submit to an on-site inspection” have been placed at 1% of a platform’s annual revenue.

Platforms with at least 45 million users will be subject to the rules, a number roughly equivalent to 10% of the EU population.

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The European Commission will introduce fines and sanctions for platforms that repeatedly violate new obligations on managing illegal content online as part of the forthcoming Digital Services Act, an EU executive official close to the matter has informed EURACTIV.

Ad transparency and illegal content

One area where the Commission is seeking to make significant ground is in the transparency of online advertising, with new rules being put forward that will give users of online platforms immediate information on the sources of the ads they see online, including granular information on why an individual has been targeted with a specific advertisement.

In terms of illegal content, platforms will be required to prove that they do not have ‘actual knowledge’ of the presence of such material on their sites to avoid liability, or to show that they would have ‘acted expeditiously’ in order to remove or disable access to the content.

The EU executive has designed a broad framework for the definition of illegal content, including illegal hate speech, terrorist content, unlawful discriminatory content, child sexual abuse material, unlawful non-consensual sharing of private images, online stalking, the sale of counterfeit products, and the non-authorised use of copyright-protected material.

Platforms will also be required to conduct annual risk assessments, probing how they have dealt with various systemic risks, including the dissemination of illegal content online.

Such risk assessments should also inform various ‘mitigating measures’ that platforms should take into account “so that they discourage and limit the dissemination of illegal content.”

This could include corrective measures “such as discontinuing advertising revenue for specific content, or other actions, such as improving the visibility of authoritative information sources.”

To aid the fight against illegal content efficient ‘notice and action’ mechanisms should be established to allow individuals to “notify them of the presence on their service of specific items of information that the individual or entity considers to be illegal content.”

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‘Voluntary own-initiative investigations’

The draft is not opposed to the idea of platforms carrying out their own ‘voluntary’ measures “aimed at detecting, identifying and removing, or disabling of access to, illegal content,” and states that liability will still be guaranteed should platforms decide to carry out such voluntary investigations.

The text makes clear that it will maintain the ban on a general monitoring obligation in the 2000 e-Commerce directive.

Digital Services Coordinators

Moreover, EU nations will be required to appoint a so-called ‘Digital Services Coordinator’ to oversee enforcement of the regulation.

The coordinator will monitor the number of users of a platform “every six months” to see whether an online service would fall within the 45 million-user scope.

In addition, coordinators have been given the right to force platforms to supply access to data, “necessary to monitor and assess” compliance with the rules, and can also request that platforms supply key data to ‘vetted researchers’ who will probe the activities of the platforms in their efforts to comply with the regulation.

A pan-European umbrella group of coordinators dubbed the European Board for Digital Services will also be established to harmonise application of the DSA.

Breton reveals details on gatekeeper criteria in Digital Markets Act

The EU’s Internal Market Commissioner Thierry Breton has disclosed details on the forthcoming criteria for the definition of so-called ‘gatekeeper platforms’ as part of the hotly-anticipated Digital Markets Act, set to be proposed by the EU executive in early December.

Digital Markets Act

Meanwhile, on Tuesday (15 December), the Commission will also table its Digital Markets Act, introducing a list of ex-ante prohibited practices by digital gatekeepers, alongside a market investigation tool.

A leaked list of prohibited practices by certain gatekeeper platforms earlier this year revealed that big tech firms may face restrictions on their business activities, including the exclusive use of data and self-preferencing activities.

However, under the blacklist draft as it currently stands, no ‘general ban’ on self-preferencing activities is likely to be proposed, though the Commission is understood to want to put forward four specific types of self-preferencing activity that it wants to outlaw, based on knowledge garnered from years of antitrust enforcement.

Also Included in the executive’s plans is a potential ‘greylist’ of activities that are deemed ‘unfair’ and may therefore require greater oversight by a competent authority.

A ‘whitelist’ of affirmative obligations, meanwhile, may contain greater interoperability responsibilities, and provide greater access to certain types of data.

Market investigation tool at risk in Commission's digital clampdown

The European Commission’s ‘market investigation tool’, expected to feature as part of the upcoming Digital Markets Act, will be scaled-down and its powers limited, after the EU executive’s internal review panel raised concerns over its operation, two sources close to the matter have told EURACTIV.

In terms of the market investigation tool, the employment of the instrument is likely to lead to new services being added to the scope of ex-ante prohibitions, new companies being designated as gatekeeping platforms, and certain new practices being regulated.

The EU executive had originally intended the tool to investigate markets close to failure, particularly in the digital economy, and impose case-by-case remedies as necessary. However, following criticism from the Commission’s internal review panel, the regulatory scrutiny board, the power of the tool to issue remedies was watered-down.

For their part on Monday evening, tech giants in Brussels stepped up their lobbying efforts.

One particularly forthright message came from Facebook, who decided to directly target fellow US firm Apple.

“We hope the DMA will also set boundaries for Apple,” a Facebook spokesperson told EURACTIV. “Apple controls an entire ecosystem from device to app store and apps, and uses this power to harm developers and consumers, as well as large platforms like Facebook.”

Google's last-ditch plea to Commission: Our EU services are at risk in Digital Markets Act

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[Edited by Benjamin Fox]

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