European Parliament Adopts Digital Services Package

On July 5, 2022, the European Parliament voted to adopt the Digital Services Act (DSA) and the Digital Markets Act (DMA) setting out a first comprehensive rulebook for online platforms. While the DSA aims to ensure user safety and transparency and accountability for online platforms, the DMA imposes a stringent regulatory regime on very large online platforms (so-called “gatekeepers”) in order to level the online playing field.

The Digital Services Act regulates the obligations of digital service providers, such as social media and online marketplaces, which act as intermediaries in their role of connecting consumers with goods, services and content. The Act has introduced:

• New measures against illegal content and a new set of obligations for online platforms to act quickly while protecting users’ rights online;
• Increased transparency and accountability measures, such as providing information on content moderation and the algorithms used for recommending the content or products; users will also be able to contest the online platforms’ content moderation decisions;
• The obligation to identify and check users that are offering products or services; this will help track down rogue traders and protect online shoppers against counterfeit and dangerous products; and
• Bans on certain types of targeted advertising and misleading practices aimed at manipulating users’ choices.

The obligations will be enforced by the European Commission (EC), which will be responsible for platforms and search engines with more than 45 million monthly users, and by the EU member states, which will be responsible for any smaller platforms.

The Digital Markets Act regulates the activities of the so-called “gatekeepers” (platforms whose dominant online position makes them difficult for users to avoid) by implementing rules that create fairer conditions for both businesses and end users.

The online platforms designated as gatekeepers will have to:

• Ensure end users can easily stop the installation of pre-loaded software;
• Allow users to unsubscribe from core platform services as easily as they can subscribe to them;
• Refrain from processing users’ data for targeted advertising without their explicit consent;
• Allow third parties to inter-operate with the gatekeeper’s own services;
• Refrain from promoting their own products or services more favorably than third parties’; and
• Allow business users to access their data in the gatekeeper’s platform, to promote their own offers and to conclude contracts with end users outside the gatekeeper’s platform.

The EC will be the sole enforcer of the rules laid down in the DMA, and will cooperate closely with the competition authorities and courts in the EU Member States. In case of non-compliance, the EC will be able to impose fines of up to 10% of the gatekeeper’s total annual turnover, or 20% in cases of repeated non-compliance. Private damages can be enforced directly in national courts.

The DSA and the DMA will enter into force 20 days after their adoption by the European Council and their publication in the Official Journal. The DSA will become applicable across the EU 15 months from its entry into force or starting January 1, 2024, whichever comes later. It will however become applicable earlier for very large online platforms – four months after they have been designated as such by the EC. The DMA will become applicable six months from its entry into force. Gatekeepers will have to comply with the DMA within six months from being designated as such.

By: Nada Milović

For more information, please contact Nada Milović at our Serbia office.