The European Union’s Digital Services Act (DSA) and Digital Markets Act (DMA) were introduced as a comprehensive package of digital policy reforms in late 2020 and approved by mid-2022, with full implementation by early 2024. These laws aim to address the market power of Big Tech and the negative impact on consumer welfare and market competitiveness.
Concerns driving these laws include the neglect of consumer welfare by major digital platforms in pursuit of profits and the distortion of digital markets due to factors like network effects and data dominance. The EU sees these issues as threats to fair competition and consumer protection.
The DSA focuses on risks to consumer welfare from illegal goods distribution and content online, including disinformation. It seeks to establish a fair online platform environment by enhancing content moderation standards and governance processes.
On the other hand, the DMA targets market contestability by regulating gatekeepers to rebalance power in the tech industry. It imposes strict operational rules on specific platforms to prevent monopolistic practices.
Laws with teeth big enough to bite Big Tech?
Both the DSA and DMA have significant enforcement capabilities, with fines of up to 6% and 10-20% of global revenue, respectively. They apply to designated Very Large Online Platforms (VLOPs) and Gatekeepers to ensure compliance.
The EU enforces DSA rules centrally for VLOPs, focusing on illegal content, election security, child protection, and marketplace safety. The DMA is similarly centralized, targeting designated gatekeepers to ensure compliance with operational requirements.
Shooting for a digital market reboot
The EU aims to address issues like reduced consumer choice, high costs, and irresponsible platform power with these regulations. By promoting competition and accountability, the EU hopes to foster trust in online services and drive innovation while safeguarding consumer interests.
The DSA and DMA take different approaches to address Big Tech issues, with the DSA emphasizing transparency for content decisions and the DMA imposing strict operational mandates on gatekeepers to promote fair competition.
The EU has opened multiple investigations under the DSA and DMA to monitor compliance and address noncompliance. Potential penalties and impacts are expected as these investigations progress.
List of DMA investigations opened to date
Investigations include scrutiny of major tech companies like Apple, Google, and Meta for potential infringements related to market dominance, user choice, and operational compliance.
The EU has been proactive in enforcing the DSA, with investigations into platforms like Twitter, TikTok, and AliExpress for various violations related to content moderation, risk management, and advertising transparency.
Penalties and impacts
While no penalties have been issued yet, investigations under the DSA and DMA are ongoing and expected to result in enforcement actions. The EU is monitoring compliance closely and expects operational changes from major platforms in line with the regulations.
Early impacts of the DSA and DMA include platform adjustments to comply with rules on content moderation, transparency, and consumer choice. However, challenges remain as some tech companies resist operational reforms required by the regulations.
