The European Parliament has passed two new pieces of legislation designed to regulate anticompetitive practices and online illegal activity, in a direct hit against tech giants such as Apple, Google, Microsoft, Amazon and Meta.
The Digital Services Act (DSA) and Digital Markets Act (DMA) are part of a new EU digital rulebook that will enforce the allowance of third-party services and apps, but tech giants fear it will pose more cybersecurity risks.
So, are the regulations good for users, or not?
New EU Regulations
The European Union voted overwhelmingly in favor of two new bills this week — the Digital Services Act (DSA) and the Digital Markets Act (DMA). Accoding to the European Parliament, these aim to “address the societal and economic effects of the tech industry by setting clear standards for how they operate and provide services in the EU, in line with EU's fundamental rights and values.”
The bills will be formally adopted by the Council in July (DMA) and September (DSA) but won't come into force until 2024, so tech companies have some time to get their systems in order. However, they are reluctant to do so.
Of the DMA, Apple says the law “will create unnecessary privacy and security vulnerabilities for our users” and “prohibit us from charging for intellectual property in which we invest a great deal.”
What Is the Digital Services Act? (DSA)
The Digital Services Act (DSA) is a set of legislative rules designed to tackle the spread of illegal content, disinformation, and to help regulate digital platforms.
According to a press release, the new obligations will include measures to:
- Counter illegal content online and help platforms react quickly
- Strengthen traceability and checks on traders in online marketplaces
- Increase transparency and accountability on digital platforms
- Ban misleading practices and certain ads targeting children or sensitive data
Under the DSA, users will get the choice to not receive recommendations based on profiling, and will be able to see more clearly what's been moderated and why content is recommended for them. Platforms will also need to grant access to their data and algorithms to authorities and vetted researchers.
Ultimately, users should have more control over their data and how it's used, a better understanding of the content being presented to them, and be safer from illegal, misleading and unwelcome messaging.
“For too long tech giants have benefited from an absence of rules. The digital world has developed into a Wild West… but there is a new sheriff in town – the DSA. Now rules and rights will be strengthened. We are opening up the black box of algorithms so that we can have a proper look at the moneymaking machines behind these social platforms.” — Christel Schaldemose, rapporteur for the Digital Services Act
What Is the Digital Markets Act? (DMA)
The European Commission considers larger platforms to be digital “gatekeepers” and pose the highest risk, so they will be subject to even stricter obligations as outlined in the Digital Markets Act (DMA). They may be subject to independent audits, in order to prevent unfair business practices.
In addition, they'll be required to allow third parties to inter-operate with their own services. For example, Apple users will be able to continue conversations across multiple messaging apps besides iMessage, such as Messenger, which will be able to be integrated, rather than users having to use one provider's own service, exclusively.
Under the DMA, business users must also be permitted access to their own data that's generated in a gatekeeper's platform, in such a way that they can conclude contracts with customers or make promotions outside of the gatekeeper's platform, if they wish.
Some of the activities big tech platforms will no longer be allowed to do, include:
- Ranking their own services or products more favourably
- Stopping users from uninstalling preloaded software, apps or third party applications
- Processing personal data for targeted advertising without explicit consent
“We no longer accept the “survival of the financially strongest”. The purpose of the digital single market is that Europe gets the best companies and not just the biggest… It is only once we have a dialogue of equals that we will be able to get the respect the EU deserves; and this, we owe to our citizens and businesses.” — Andreas Schwab, rapporteur for the Digital Markets Act
What Does this Mean for Big Tech?
Naturally, big tech companies, who benefit hugely from some of the acts that will be banned by these new laws, aren't happy. Corporate Europe Observatory revealed in April that lobbying budgets skyrocketed in an attempt to neturalize the effects of these laws, with Apple, in particular, having near-doubled their efforts.
Privacy and security vulnerabilities opened up by the sharing of data with third parties will certainly need to be addressed, but the realities are that these concerns should not outweigh the positive freedoms, rights and protections EU users will gain under the legislation, and the US would do well to follow suit.
Small businesses will benefit significantly from the ability to share the market more openly with popular platforms, and both customers and businesses will gain from the ability to transfer data between services, and choose their own experiences and permissions more freely.
Regardless, the time has passed for stamping feet. Any business operating in the EU that doesn't comply with the new rules could be fined “up to 10% of its total worldwide turnover in the preceding financial year, or up to 20% in case of repeated non-compliance.”
Tech regulation has been a long time coming — and given that 44% of Americans think major tech companies should be more regulated too, the US may not be far off.
With the rise of misinformation, hate groups, cyber bullying, trafficking and fraud, more regulation in the US is needed — exactly how much will be, is yet to be decided.