The European Parliament has given its final seal of approval on two main parts of the regulations that will update the European Union’s rules for digital business.
The Digital Markets Act (DMA) will introduce new “advance” competition rules for tech giants guarding the gates to ensure that markets are fair and open; And the Digital Services Act (DSA), which applies more broadly — to services and platforms alike large and small — will establish governance rules around the handling of illegal content and products, as well as demand broader accountability on larger platforms that have additional responsibilities within the framework.
The Commission proposed the incoming regulations at the end of 2020, so their adoption was swift – reflecting a broad consensus by lawmakers around the bloc on the need for tougher and stricter rules for online services.
The regulations are expected to go into effect early next year after the formal adoption process is complete. Today’s public vote of Parliament comes on the heels of the political agreement on the two files reached between EU participating lawmakers earlier this year – in March for the DMA; and April for the DSA.
You can read our previous coverage of those political deals – which are the gist of what Parliament has confirmed support for today – here:
The European Commission, which drafted the laws, welcome Parliament formally adopting the files – with the Commissioner for the Internal Market, Thierry Breton, calling it a ‘overwhelming’ voteHistorical“.
Parliament voted 588 in favor of the DMA; While 539 MEPs supported the DSA.
UNHCR Executive Vice President Margrethe Vestager also issued a statement – praising what she described as a “world first”:
“The European Parliament has adopted a global first: strong and ambitious regulation of online platforms. The Digital Services Act enables the protection of the rights of users online. The Digital Markets Act creates fair and open online markets. For example, illegal online hate speech can also be dealt with. That products purchased online are safe. Big platforms will have to refrain from promoting their own interests, sharing their data with other companies, and enabling more app stores. Because with scale comes responsibility – as a big platform, there are things you have to do and things you can’t do it”.
From here, there are only a few steps left in the EU legislation procedure: in particular, the formal approval of the texts by the Council – after which they will be published in the Official Journal of the EU, and come into force after 20 days (so the expected timeline is autumn ; although, as noted above, the laws won’t come into effect until 2023 – with some DSA provisions having a longer application period).
UNHCR will play a key implementing role for both systems.
Under the DMA, fines for violations can increase by up to 10% of the tech giant’s global annual sales volume – or even 20% for repeat offenders. While penalties under DSA can be up to 6% of global annual sales volume. So the stakes are high for everyone involved.
Many questions remain about the provision of enforcement resources, their overall suitability for purpose and the “fleet” an EU executive would prove to be for such a massive new regulatory duty.
Possibly in response to some of these concerns, Breton provided a “sneak peak” on how the commission would handle its new oversight duties.
write in Blog Post Posted on LinkedIn Today, after the parliament vote, he said the Commission would set up ad hoc teams within the EU’s Directorate-General for Communications Networks, Content and Technology (also known as DG Connect) – which would be “organized around thematic areas”, including “community, technical and economic aspects”.
“Issues such as risk assessments and audits will be handled by the community issues team,” he writes in the post, providing some examples of how the duties of these teams have changed. The technical team will be responsible for issues such as the interoperability of messaging services, the use of non-fungible tokens for product tracking, or the development of standards that support the new rules.
“Finally, the economic team will cover unfair trading practices related to DMA, such as data access so-called FRAND clauses; or ensuring respect for DSA-related liability exemptions or KYC rules for the markets.”
He also notes that the teams will work closely together to avoid a very siled response to platforms that he has “usually” acknowledged create cross-cutting challenges – and also with a “program office” that plays a coordinating role and deals with “international issues and litigation”.
So, the Commission is clearly preparing the tech giants to respond to its central enforcement — and perhaps also to enlist their politicians to use high-profile channels to complain (and perhaps retaliate; impose tariffs on anyone?) on their behalf.
The EU has said it will boost staffing levels next year and in 2024, and seek to ramp up in-house technical expertise, to meet the requirements of the enforcement role – as well as reallocate some of the existing staff and resources to new tasks. But in the blog post, Britton said he expects the dedicated DMA and DSA DG Connect team to have more than 100 full-time employees after this recruitment drive.
Questions will likely remain as to whether this level of resources will be sufficient for the upcoming major workloads associated with organizing dozens of large (and some really huge) platforms.
The commission partially offsets the cost of hiring employees for a DSA application by charging for larger platforms and large search engines.
Britton’s post notes this without specifying how much the fee platform giants will have to pay – but reports have suggested that platforms have successfully lobbied to reduce the amount they will have to pay for being policed. So it seems likely that resource concern will continue.
Another new element of EU platform oversight, which Breton is listing at the height of the hack, includes the creation of what he refers to as a “high-level European Center for Algorithmic Transparency” – which the EU wants to uphold DSA’s algorithmic transparency requirements for online platforms (also known as VLOPs).
He suggests that “this new center will attract world-class scientific talent in data science and algorithms that will complement and assist enforcement teams.”
Again, though, it remains to be seen if the commission will be able to pay enough to attract the talent needed for the scale and complexity of dealing with platforms black boxes.