The European Union Parliament has just passed two bills after months of internal negotiations. The two bills primarily aim to curb the power of Big Tech, preventing firms like Google, Amazon, Facebook (sorry, Meta), Microsoft, and Apple from using their market dominance to stifle competition while also placing new legal requirements on their various platforms.
The Digital Services Act (DSA) places new obligations for platforms to regulate the content they both collect and disseminate, whether that be streaming media or data collected for targeted advertising. Platforms will be required to react faster to remove illegal content, with random checks performed to determine if that illegal content resurfaces. Platforms will also need to disclose their rules regarding content moderation and let users contest moderation decisions.
The DSA also bans certain kinds of targeted advertising (either to children or ads based on sensitive data collection), and bans misleading online advertising practices. The bill specifically calls out “dark patterns,” which tricks the user into clicking on ads or agreeing to terms by obfuscating a site’s design. Users will also have the legal right to completely opt out of algorithmically generated recommendations based on collected data.
The Digital Markets Act (DMA) aims to stop the largest tech companies (see the same list above) from abusing their power to ensure market dominance (also known as "gatekeeping"). Companies like Google or Microsoft will no longer be able to rank their services higher in a search and will be legally required to make it easy to uninstall preloaded software from their devices. Companies will also be required to obtain user consent to collect data for targeted ads.
Bigger corporations will be required to allow third parties to interoperate with their platforms, giving smaller companies a chance to compete. Smaller businesses will also be able to obtain business data kept on larger company’s platform.
The DM also has some real teeth to it. Gatekeepers that are found in violation of the new rules could be fined up to 10 percent of their worldwide turnover for the preceding financial year, and up to 20 percent on repeat offenses. Not even Apple can eat fines that big.
The Digital Services Act goes into effect January 1, 2024, or 15 months after ratification--whichever comes sooner. The Digital Markets Act starts soon after, with companies designated as gatekeepers given six months to comply with the new rules.