The European Union’s Digital Services Act: a means of modernization in the new Digital Era

di Alessandro Iemma - 30 Novembre 2020

  from Brussels, Belgium

   DOI: 10.48256/TDM2012_00161

In the past years, the European Union, through the Commission, has started to go after tech giants. Amazon, Apple, Google, and Facebook have been subject to investigations for hindering competition with their market dominance. In fact, in 2017, the Commission fined Google €2.4 billion for refusing access to other companies to Google’s shopping comparison service (European Commission, 2017). Moreover, In July 2020, the European General Court decided that the Commission did not have enough proof to show that Apple received tax advantages in Ireland. This decision was appealed by the Commission, but it will be hard for it to win. These are just some examples of how the EU is becoming always more worried about tech giants and more willing to fight them. Therefore, now, the EU is moving towards a new means to tackle Big Tech’s uncompetitive behaviors: the Digital Services Act (DSA). 

The DSA will be presented on 2 December 2020, by the Commission, along with the Digital Markets Act. It will be a great achievement for the “tormentor-in-chief” Executive VP Vestager, who has been against the tech giants for years. In fact, she obtained this nickname after her victories against tech giants through hefty fines. 

 

The current legal framework for digital services 

The current legal framework for digital services in the European internal market is made up of the 2000’s e-Commerce Directive. Its purpose was to clear obstacles, or borders, for online services inside the EU, and boost administrative cooperation between MSs (European Commission, 2020). It focuses on three macro-areas of harmonization: transparency, commercial communications, and liability of intermediary providers of service. As far as the liability of intermediaries are concerned, they are exempted if they fulfill two conditions (European Commission, 2020). The first condition is that the service provider needs to remove or disable the content as soon as they become aware of the illegal activity. The second one is that the service provider needs to have a role that is merely technical, passive, and neutral towards the illegal content. Besides, the Directive also laid out essential guidelines to follow regarding mandatory consumer information and commercial communications (European Commission, 2020). 

The internal market clause is of pivotal importance for the e-Commerce Directive (European Commission, 2020). This clause is based on the reciprocal trust of the Member States that the country of origin regulation is sufficient and tackles the issue in a good manner (IPOL, 2020). This principle is based on the mutual recognition of goods and services, which is a building block of European integration (the Cassis de Dijon case of 1979). Indeed, to work well, this clause requires the harmonization of EU law regarding digital services between the different EU States. Consequently, as stated also in the IPOL’s assessment, the rule of the country of origin should be kept in light of any future development (IPOL, 2020). 

The 2016 Public Consultation 

The European Commission has consulted the public in 2015 to see their priorities to better understand what to include in the future DSA (European Commission, 2016). In the results of this Public Consultation published in 2016, both beneficial aspects and problems of online platforms were recognized by the citizens. Lack of transparency and insufficient information on data collection are among the problems identified (European Commission, 2016). Moreover, a majority of respondents agree on different policy approaches to deal with illegal content. The majority is in favor of a “take down and stay down” approach: once content is taken down, it should also be prevented from coming up again (European Commission, 2016). 

Regarding the collaborative economy instead, respondents – that at the time were first engaging with collaborative economy – are uncertain. At the same time, both businesses and consumers in this sector agree that there are obstacles to collaborative economies in the European legal framework. Service providers that use online platforms are in favor of the development of existing rules. Contrarily, service providers that still do not use online platforms extensively are in favor of new rules for this sector only (European Commission, 2016). 

The (future) Digital Services Act 

The DSA has developed by taking into account the issues that rose in the last twenty years. In fact, the online world has created lots of risks in addition to the many opportunities (European Commission, 2020). At the same time, internet-based SMEs have encountered many contestability, fairness, and possibility of market entry issues. In fact, the DSA will also try to counter these problems by modernizing the e-Commerce directive in two ways (European Commission, 2020). First, there will be a system of cooperation to ensure the supervision of the platforms and guarantee enforcement to protect users’ rights. Second, large online platforms will be gatekeepers: new companies will have to cooperate with the big ones to enter the market (News Media Europe, 2020). Therefore, the DSA should ensure that large companies act fairly to provide consumers with the widest choice and keep the market competitive. 

Additionally, the Commission will also introduce, through the DSA, sanctions/fines for platforms that repeatedly commit illegal actions (Stolton, 2020). Concurrently, liability exemptions as of the e-Commerce Directive are still accepted. This means that providers are exempted from liability if they immediately remove the illegal content as soon as they notice it. The sanctions regime of the DSA has been introduced following the model of NetzDG law, the German Network Enforcement Act (Stolton, 2020). At the same time, harmful content is not tackled by the Commission who most likely will not introduce new stringent rules. As highlighted by Jourová, the Commission’s VP for Values and Transparency, the Commission will focus more on preventing the spread of harmful content online (Stolton, 2020). 

The position of Digital SME and Google 

In a position paper regarding the DSA published by the European Digital SME Alliance, the emphasis is put on the SMEs (Digital SME, 2020). Interestingly, they highlight the fact that the DSA should harmonize the digital single market to render it as open and competitive as possible. In the meanwhile, a special focus should be put on the SMEs, as a one-size-fits-all would affect them too. Thus, what Digital SME proposes is to not adopt a one-size-fits-all approach, but to target the gatekeepers’ platforms directly (Digital SME, 2020).  

Google has made its position public as well. Karan Bhatia is the VP of government affairs and public policy at Google and has been the spokesperson for Google’s position. While it supports the Commission’s will to develop new rules regarding the digital, Google is worried that this could hamper economic recovery (Amaro, 2020). For example, the new legislation could prevent companies like Google to build new tools – like the ones of the spring lockdown – that would help European recovery (Bhatia, 2020). This would also affect small businesses that make use of Google’s tools to get in touch with their consumers. For example, the DSA could prevent Google from using the “near me” Google Maps’ function and the ability to book online directly from that search (Bhatia, 2020). Therefore, Google is against measures of the DSA that could prevent innovation and the creation of these tools. 

The Visegrad Four countries 

Czech Republic, Slovakia, Poland, and Hungary – named the Visegrad Four – have expressed their view on the DSA. Their idea is that the freedom of speech is pivotal and that therefore Europe should not favor censorship (Yar et al., 2020). Marcel Kolaja, a Czech MEP and VP of the EP, has touched on the notice and action mechanism (Yar et al., 2020). He says that the European legal framework should focus on legislating on the noticing of illegal content instead of its removal. Regarding liability, instead, there is the fact that usually a lot of fake news is shared on the internet in good faith. In this case, as emphasized by Patrik Tovaryš, Head of Information Society Services Unit from the Czech Ministry of Industry and Trade, you should be exempted from liability (Yar et al., 2020). 

The Slovak government puts the responsibility of online platforms at the center of the DSA. Platforms should not be liable for illegal and harmful content published by their users (Yar et al., 2020). In Poland, instead, NGOs have expressed their opinion on the DSA focusing on the right to privacy and civil liberties. They say that platforms should be culpable for infringing content only where two criteria are met (Yar et al., 2020). First, the actual knowledge of the infraction, and second, it is a clear notice from a user or an authorized body. Lastly, Hungary suggests that an independent EU institution should be created to check compliance with transparency, political ads, and content moderation (Yar et al., 2020). Moreover, as the Hungarian MEP Anna Donáth said, platforms should be central in fighting disinformation. Besides, legal remedies should be available to counter content moderation decisions (Yar et al., 2020). 

What about China? 

China has influenced and shaped technology greatly. Its goal is to expand its technological power even more. In fact, Xi Jinping, China’s President, has agreed on a €1.2 trillion push to make China the biggest tech industry in the world by 2025 (Tenzer, 2020). Most of all, contrary to US Big Tech companies like Google, Chinese companies have always accomplished bypassing EU law (Tenzer, 2020). Therefore, the DSA’s, and thus the EU’s, success in data privacy protection depends also on how the EU can control China. This is because the Chinese government has been very successful in broadening their view of national security, increasing its number of penetration tests (Tenzer, 2020). Thus, it is easy to think that China will be able to do them also in other markets by breaking into them and stealing data. 

Another important issue is the inability of the European Union to keep DJI’s action under control. DJI is a strong company specialized in aerial photography systems, and it has been accused of cooperating with the Chinese government in many crimes. It has been alleged by the US and Australia already, but the EU kept silent even after violations of the EU’s data privacy (Tenzer, 2020).  This shows how China has been able to expand its market, keeping its internal market closed. But it also highlights the fact that the EU needs to solve its security problems with China before becoming autonomous strategically. Promising, though, is the fact that EU leaders have accused China of attacking European Cybersecurity and for its actions in Hong Kong (Godement, 2020). This happened in the EU-China Summit in June and, hopefully, these accusations will soon also extend to Chinese corporations. 

 

Bibliography (A-E)

Amaro, S. (2020). The EU is about to announce new rules for Big Tech — and there’s not much they can do about it. CNBC, [online] Available at: https://www.cnbc.com/2020/11/05/digital-services-act-how-the-eu-is-going-after-big-tech.html [Accessed 12 Nov. 2020].

Bhatia, K. (2020). The Digital Services Act must not harm Europe’s economic recovery. EURACTIV, [online] Available at: https://www.euractiv.com/section/digital/opinion/the-digital-services-act-must-not-harm-europes-economic-recovery/ [Accessed 8 Nov. 2020].

European Commission, (2017). Antitrust: Commission fines Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service. [online] Available at: https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1784 [Accessed 8 Nov. 2020]. 

European Commission. e-Commerce Directive. [online] Available at: https://ec.europa.eu/digital-single-market/en/e-commerce-directive [Accessed 8 Nov. 2020].

European Commission, (2016). Results of the public consultation on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy. [online] Available at: https://ec.europa.eu/digital-single-market/en/news/results-public-consultation-regulatory-environment-platforms-online-intermediaries-data-and [Accessed 8 Nov. 2020].

European Commission. The Digital Services Act package. [online] Available at: https://ec.europa.eu/digital-single-market/en/digital-services-act-package [Accessed 8 Nov. 2020].

European Digital SME Allicance. (2020). Position Paper on Digital Services Act (DSA). [pdf] Belgium: European Digital SME Alliance. Available at: https://www.digitalsme.eu/digital/uploads/Position-paper-on-Digital-Services-Act-FINAL.pdf [Accessed 8 Nov. 2020]. 

 

Bibliography (G-Y)

Godement, F. (2020). Sommet UE-Chine : quand l’Europe se mobilise. Institut Montaigne, [online] Available at: https://www.institutmontaigne.org/blog/sommet-ue-chine-quand-leurope-se-mobilise [Accessed 12 Nov. 2020].

Kayali, L. (2020). Brussels eyes bigger stick to take on Big Tech. Politico, [online] Available at: https://www.politico.eu/article/margrethe-vestager-brussels-seeks-to-strengthen-competition-tool-against-big-tech-digital-services-act/ [Accessed 8 Nov. 2020].

News Media Europe. (2020). DSA Series #3 – The power of digital gatekeepers. News Media Europe, [online] Available at: http://www.newsmediaeurope.eu/news/dsa-series-3-the-power-of-digital-gatekeepers/ [Accessed 8 Nov. 2020].

Policy Department for Economic, Scientific and Quality of Life Policies (IPOL). (2020). The e-commerce Directive as the cornerstone of the Internal Market. European Parliament, [online] Available at: http://www.crid.be/pdf/public/8579.pdf [Accessed 10 Nov. 2020].

Stolton, S. (2020). EU Commission to introduce sanctions regime for illegal content in Digital Services Act. EURACTIV, [online] Available at: https://www.euractiv.com/section/digital/news/eu-commission-to-introduce-sanctions-regime-for-illegal-content-in-digital-services-act/ [Accessed 8 Nov. 2020].

Stolton, S. (2020). Platforms should be allowed to take ‘voluntary measures’ in content removal, MEP says. EURACTIV, [online] Available at: https://www.euractiv.com/section/digital/interview/platforms-should-be-allowed-to-take-voluntary-measures-in-content-removal-mep-says/ [Accessed 8 Nov. 2020].

Tenzer, N. (2020). In protecting Europe’s data, can EU regulation keep up with Chinese tech?. EURACTIV, [online] Available at: https://www.euractiv.com/section/digital/opinion/in-protecting-europes-data-can-eu-regulation-keep-up-with-chinese-tech/ [Accessed 8 Nov. 2020].

Yar, L. et al. (2020). Visegrad Four want to distinguish between ‘illegal’ and ‘harmful’ content in Digital Services Act. EURACTIV, [online] Available at: https://www.euractiv.com/section/digital/news/visegrad-four-want-to-distinguish-between-illegal-and-harmful-content-in-digital-services-act/ [Accessed 8 Nov. 2020].

 

 

Autore dell’articolo*: Alessandro Iemma, expert in International Relations and European Union of the think tank Trinità dei Monti. BA in Politics, Philosophy and Economics at Luiss Guido Carli University. Master of International Relations at Luiss Guido Carli University. Currently attending one semester at the ULB – Université Libre de Bruxelles.

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