By Mousume Roy, APAC Reporter, HCL Technologies Ltd.
In a recent ruling, European Union lawmakers approved new landmark rules—Digital Markets Act (DMA) and Digital Services Act (DSA). The intent of these new rules are to curb the market dominance of tech giants such as Alphabet unit Google, Amazon, Apple, Facebook and Microsoft.
Following the General Data Protection Regulation (GDPR), the EU is once again setting a global standard for technology regulation with the adoption of regulatory laws that outlines new obligations in terms of content management and competition.
The Digital Markets Act, also commonly referenced as the ‘next’ GDPR, focuses on preventing anti-competitive wealth generation models and monopolistic practices of tech giants. While, the Digital Services Act (DSA) aims to toughen the consequences for platforms when they host banned content.
By introducing these new laws, the European Union seeks to control illegal content online. According to the DSA, everything that is illegal offline will also be illegal online. DMA is designed to ensure a level playing field for all businesses online.
The Digital Markets Act (DMA) and Digital Services Act (DSA)
The DMA aims to ensure more competition in the European Digital Markets, by preventing big tech firms from abusing their market power. Under the new rules, it will be easier for the startups to enter the market.
This legislation will scrutinize the big tech giants or ‘gatekeepers’ to promote equal operating conditions for other businesses that use the platforms the tech giants own. Should a company not comply with the rules, the European Commission can impose fines of up to ten percent of a company’s total annual turnover for DMA violations and six percent for a DSA breach. These penalties are similar to those that can be issued under the General Data Protection Regulation (GDPR).
Members of the European Parliament (MEPs) approved the final versions of the Digital Markets Act. Andreas Schwab, German MEP and a key backer of the laws, said: "With this legislative package, the European Parliament has ushered in a new era of tech regulation."
Meanwhile, the Digital Services Act (DSA) aims to modernize the e-Commerce Directive and improve content moderation on social media platforms to address concerns about illegal content, transparent advertising, and disinformation.
The DSA prohibits targeted advertising aimed at children or based on sensitive data such as religion, gender, race and political opinions. Dark patterns, which are tactics that mislead people into giving personal data to companies online, will also be prohibited.
How have the tech giants reacted?
Earlier in April, in a statement to AFP, Apple said that certain provisions were a cause for “concern” and that they would “create unnecessary privacy and security vulnerabilities for our users; while others will prohibit us from charging for the intellectual property in which we invest heavily".
A Google spokesperson told AFP, "While we support many of the DMA's ambitions on consumer choice and interoperability, we remain concerned about the potential risks to innovation and the variety of choices available to Europeans.” Google went on to say it would study the final text and cooperate with regulators on its implementation.
The DMA outlines a list of concerns targeting each tech giant's core business practices – that could have international implications.
"DMA is here to stay and will be quickly mirrored in a number of countries. The flexibility that Big Tech has had will now be constrained, as the regulatory 'straitjacket' will get tighter globally," said Ioannis Kokkoris, competition law professor at Queen Mary University in London.
