The EU member states have reached an agreement on the proposed Digital Markets Act and Digital Services Act. With the Council positions confirmed, the legislation to regulate the tech sector and online services can move to the final stage of negotiations with the European Parliament. The aim is to reach a final agreement on both laws in the first half of 2022 under the French presidency of the EU, so the legislation can take effect before the end of next year.
The Digital Markets Act is expected to be taken up first, after it cleared Parliament earlier this week. The MEPs, Commission and EU states have several aspects of the law still to negotiate, after each took a different approach to how to define the 'gatekeepers' that will be subject to the law. There are also differing opinions as to how much power the Commission and national regulators will have to intervene at the large internet platforms, potential new rights for users of the platforms, and making sure the obligations imposed on internet companies are clear enough to stand up to legal challenges.
Updating e-commerce rules
The Council of the EU made up of member states' competition ministers also adopted its position on the Digital Services Act. The proposed update to the eCommerce directive of 2000 must still get final approval in Parliament before the trilogue negotiations can start with Parliament and the Commission.
The DSA will apply to a much wider range of online service providers than the DMA, with the aim of making what's illegal offline - such as violence, hate speech and counterfeit goods - also illegal online. It also introduces new transparency obligations for websites, such as disclosures on the use of algorithms and personal targeting, and targets abuses by intermediary platforms, such as app stores and e-commerce marketplaces, which offer both their own retail services and a platform for competing third-party sellers.
Negotiations on the scope of the DSA will also be needed, as each EU institution took a somewhat different approach to the drafting. The Council's text explicitly includes online search engines, provides for enhanced protection of minors online and adds more obligations for so-called VLOPs (very large online platforms) than what the Commission proposed a year ago. While enforcement of the DSA would follow other EU regulations, where companies may rely on a single national regulator in the country where they are based to cover all their activities in the EU, special powers may be reserved for the European Commission to enforce the rules for VLOPs.
Telecom sector pleased
ETNO and the GSMA, the two main lobby groups for the telecom sector, welcomed the progress on the legislation and called for a swift approval of the final laws. They expect the DMA to deliver more fair terms for European internet users as well as companies in the telecom sector, which are looking for a more level playing field to compete with the internet giants. At the same time, they cautioned against extending too many of the DSA's provisions to "intermediaries lower in the internet stack", in particular putting too much responsibility on ISPs to block illegal content given their technical limitations.
