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Under the proposals, known as the Digital Markets Act and Digital Services Act, big online platforms like Google, Amazon and Facebook will face new limits and obligations on how they police content on their platforms and how they interact with their business users.
The Digital Markets Act will impose new obligations on so-called gatekeepers, or online players that determine how other companies interact with online users, to ensure that they don’t stop other companies from competing for users.
Under the Digital Services Act, online platforms will have to do more to limit the spread of illegal content and goods.
The proposals are Brussels’ most ambitious attempt yet at reining in Big Tech, but their path to becoming law is dicey.
They will be picked apart by the European Parliament and the Council of the EU, which will draft their own versions of the bills, which in turn will be picked apart further.
Commission Executive Vice President Margrethe Vestager, who presented the proposals on Tuesday, estimated at best they might take two years to come into force: “I still think that fast is, give or take, a year and a half and then another six months for the regulation to take effect.”
But she acknowledged their passage isn’t in the Commission’s hands. “Obviously we are eager to work with member states and the European Parliament to make it faster, so I don’t think that it will depend on us,” she added.
European lawmakers and the 27 EU countries will need to agree — first among themselves and then with each other — on what they want the rules to look like.
The process starts with agreeing on what the texts actually cover. EU countries already disagree on whether the Digital Services Act should also include harmful, yet legal, content such as disinformation, and they also don’t agree on how to define gatekeepers — potentially lengthening the time the bill is debated.
And while the EU institutions bicker, digital markets themselves are likely to evolve. “Two years in the digital world, it’s a generation,” said André Loesekrug-Pietri from the Joint European Disruptive Initiative, a French think tank.
Even if the law is expedited and passed with record speed, legal challenges could still torpedo the whole thing. Big Tech companies deemed to be gatekeepers will likely challenge that designation before the EU’s General Court, for example.
Here’s an overview of some of the hurdles the proposals need to clear before they come into force.
Convincing the DMA-skeptics
All 27 EU countries will need to agree on a common stance on both the Digital Services Act and the Digital Markets Act for the laws to move forward.
And while there is a broad consensus among capitals that platforms should do more against illegal content online, discussions will prove trickier on the Digital Markets Act, which has been more divisive.
An unlikely alliance between the liberal Dutch and the interventionist French has recently formed in the Council. Both want to place some restrictions on gatekeepers, but other countries remain to be convinced that new rules are needed.
Ireland, the European home of the largest tech companies including Apple, Facebook, Google and Microsoft, already made it clear it thinks there is no evidence that Big Tech stifles competition. Competition authorities from Finland, Denmark and Sweden also warned against “a detailed list of obligations and prohibitions,” a list of dos and don’ts which is included in the bill.
Beware the lawsuits
The Digital Markets Act is designed as a tool to ensure the rules are consistent across the single market — not as a competition tool, which would require unanimity in the Council to pass.
But Big Tech is likely to see the bill very much as a competition tool — and one that is specifically designed to stymie them. The Commission needs to watch out for potential lawsuits, and hope the bill has sure legal footing to not get gutted in court.
“To be on the safe side, member states and the Parliament would need to ensure that the final version of the Digital Markets Act does not go beyond its declared goal of preventing regulatory fragmentation across the internal market,” said Alfonso Lamadrid, a partner at law firm Garrigues.
It won’t be easy. Carola Ekblad, of the Confederation of Swedish Enterprises, said it’s hard to design rules that are “truly general and are not aimed at one or a few specific companies,” especially when the whole purpose of the Digital Markets Act is to identify and regulate gatekeepers.
“The Digital Markets Act must meet the requirements for solid evidence, due process and governance to avoid legal uncertainty and arbitrary decisions,” she said.
A sticky point in the Digital Services Act will be to define exactly how EU countries cooperate to enforce content moderation rules.
The Commission’s proposal allows for one country to ask another to demand a platform based in the second country to remove content — a provision that European lawmakers warn could cause problems.
“What happens when member state X tells member state Y to remove LGBTQ+ information, and it refuses?” said Czech MEP Dita Charanzová from Renew Europe.
The European Parliament has already fought against similar cross-border mechanisms in newly-adopted legislation on terrorist content, which was delayed for months mostly because of the same issue. They’re likely not to give up too easily on this one either.
Agree on online ads
The Commission’s proposals only mandate transparency requirements for online advertising, without imposing limits on the practice itself.
That sets up another clash with the Parliament, which narrowly approved a nonbinding text calling for the Commission to phase out and eventually ban targeted advertising in October.
MEPs Paul Tang and Tiemo Wölken, members of the Socialists & Democrats who campaigned to ban personalized advertising, said they were disappointed at what they saw as a lack of ambition from the Commission.
Green MEP Alexandra Geese praised the bill in large parts, but said it’s “questionable whether they solve the basic problem: the enormously lucrative business of displaying personalized advertising, which is based on spying on people in all areas of life.”
The European Parliament itself is divided on the matter, which doesn’t make for speedy progression.
Keeping the US happy
The EU’s digital rules will mainly affect big U.S. technology companies, which could reinforce existing tensions with Washington.
“The biggest source of uncertainty” in the success of the Commission’s proposals is the EU-U.S. relationship, said Mario Mariniello, a senior fellow at Bruegel, a think tank.
How the future Biden administration will react to the Commission’s new rulebook remains an open question at this stage.
Vestager herself argued that times have changed, and the tide has turned for Big Tech in the U.S. too. “There are no surprises here for our U.S. colleagues,” she said.
“To some degree, they will see things differently, but I think the debate will be very different than if we tabled this five years ago,” Vestager added.
The question is how keen the U.S. is to let other jurisdictions be the ones scrutinizing U.S. companies, and the immediate answer is: not very. The U.S. Chamber of Commerce was quick to slam the proposals. “It seems Europe is intent on punishing successful companies that have made deep investments in Europe’s economic growth and recovery,” the organization said.
There is a risk that the Digital Markets Act and the Digital Services Act could be a flop if the initiatives are perceived by Washington as “unilateral,” Mariniello said. Safer passage for the proposals is guaranteed if “the European Commission and the U.S. would be able to fight together.”