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Tech Regulation Digest: A Big Setback for Big Tech: The Adoption of the Digital Service Package in the EU

Tech Regulation Digest: July 2022
A Big Setback for Big Tech: The Adoption of the Digital Service Package in the EU

Overview

At the beginning of the month, the European Parliament adopted The Digital Markets Act (DMA) and its companion, The Digital Services Act (DSA). This historically fast adoption of tech regulation legislation has made the European Union the first to adopt an all-encompassing standard for regulating the tech sector. 

Background

The Digital Markets Act and Digital Service Act were first conceptualized in 2015, and the initial strategy and first publication of the acts began in the latter half of 2020. The goal of the Acts was to reign in the tech giants and create a cohesive regulatory structure for tech across the EU. From the first publication of the DMA and DSA by the EU Commission in December of 2020, it only took a year and a half for them to reach their initial adoption.

The Digital Markets Act targets antitrust concerns in the digital market, while the Digital Services Act is more concerned with consumer protection and digital transparency. The two pieces of legislation interact and complement each other to create a comprehensive regulatory framework for the tech industry.

The Digital Markets Act targets tech giants, or digital “gatekeepers,”  laying out fines and punishments for those who break the law. The goal of the legislation is to increase competition and address the issue of brand monopolization. For example, the DMA would require interoperability between Apple’s iMessage and Meta’s WhatsApp. Another example would be that the DMA requires platforms to allow users a choice in their selection of a host browser, search engine, and voice command. 

The Digital Service Act aims to make the internet safer for users and set rules for making what is illegal in the physical world, illegal online as well. Platforms are charged with more responsibility to police and remove illegal content with punishments and fines in place for those who fail to do so.
Why is this important?

The adoption of the DMA and DSA places the EU at the global forefront of comprehensive, democratic tech regulation. The big tech firms (Google, Apple, Meta, Spotify, and others) spent almost €30 million last year lobbying against this legislation; however, their efforts failed. A global precedent for reigning in big tech through legislation has now begun.

 

[1] gatekeepers are defined as platforms with at least 45 million monthly active users and an annual turnover in the European Economic Area (EEA) equal to or above €7.5 billion in each of the last three financial years, or where its average market capitalization or equivalent fair market value amounted to at least €75 billion in the last financial year

[2] Interoperability is the ability of computer systems or software to exchange information and interact across systems.