EU Institutions Reach Agreement On Landmark Regulations Targeting Big Tech – Privacy Protection – Worldwide – Mondaq

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Privacy In Focus

The European Commission has reached a provisional politicalagreement on two legislative proposals that will upend currentrules governing digital services, the Digital Markets Act (DMA) and the Digital Services Act (DSA). The Commissionreached a political agreement on the DMA on March 25, 2022 and anagreement on the DSA on April 23, 2022. There still are severalsteps needed before the new laws will take effect. Currently, thelaws are expected to take effect in early 2024.

The DMA and DSA together will fundamentally change how digitalplatforms operate and engage with consumers and third-partyoperators in the EU. A high-level overview of key provisions ofeach Act is provided below.

The DMA places limits on the market power of the largest digitalplatforms in an effort to level the playing field for smallerplayers. Under the new regulation, the largest digital platformsthat act as a "gateway" to digital services will besubject to a host of regulatory obligations.

Scope

The Act applies to a company that meets the followingcriteria:

Regulatory Obligations

The DMA requires that covered entities take steps to ensure thedigital market is open and fair to smaller businesses andconsumers. Among other requirements:

Gatekeepers must allow consumers to:

Gatekeepers must allow other businesses to:

Additionally, gatekeepers are prohibited from:

Penalties for noncompliance are stiff, with the maximum penaltybeing set at 20% of a gatekeeper's total worldwide turnover inthe preceding financial year. Other enforcement options includemarket investigations that result in behavioral or structuralremedies.

The DSA's regulatory framework imposes rules governing howplatforms moderate content, advertise, and use algorithmicprocesses. This Act aims to increase the transparency andaccountability of online platforms by encouraging innovation andcompetition opportunities for smaller platforms and a strongprotection framework for consumers who interact with onlinecontent.

Scope

The DSA applies to a variety of online intermediaries andplatforms, including internet providers, social media platforms,app stores, and content-sharing platforms. The obligations of theDSA depend on the size of the business and factor in the number ofusers and nature of the services provided. The most stringentobligations apply to "very large" platforms (VLP).Smaller entities, while largely exempt from the more complexcompliance requirements, are encouraged to follow them as a bestpractice.

Regulatory Obligations

The DSA requires transparency and accountability to create adigital space that is safe for all users. The Act requires, amongother obligations, that covered entities:

The Commission will share responsibility for enforcing the DMAwith Member State regulators. The Commission will enforce theobligations against VLP. Other entities will be subject to thesupervision of Member State regulators, with the support of a newindependent advisory group, the European Board for DigitalServices. The Commission will charge platforms annual supervisoryfees to be established based on the costs incurred by theCommission to exercise its supervisory tasks, capped at 0.05% ofannual worldwide net income.

Ania Trichet, a Wiley 2022 Summer Associate, contributed tothis article.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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EU Institutions Reach Agreement On Landmark Regulations Targeting Big Tech - Privacy Protection - Worldwide - Mondaq