Greetings from Brussels!
You may recall from last week’s notes my reference to the FT interview with Thierry Breton, EU commissioner for internal market, in which he commented on the overhaul of EU digital rules, particularly as it affects the big technology companies. This week, Politico EU reported — allegedly based on their reading of a series of European Commission internal documents — that a wide range of legislative tools and measures are being drawn up to counter anti-competitive behavior while obligating the dominant tech companies to protect users against illegal content and other manipulative activities.
It comes as no surprise that these measures will form part and parcel of the proposals under the Digital Services Act expected in December. In a recent exchange of views between Breton and the European Parliament Committee on Internal Market and Consumer Protection, Breton echoed President Ursula von der Leyen’s State of the Union message saying that the Digital Services Act will, on the one hand, cater to regulate the activity of platforms that have become major players in the digital economy (“gatekeepers”), and on the other hand, provide tools and instruments to supervise digital services.
The proposed gatekeeper rules approach differs somewhat from the norm in that instead of waiting for competition complaints and cases to establish precedence and rulings, future legislation would be drafted to regulate the technology market "ahead of time" (ex-ante) imposing levels of obligation on gatekeeper players — seen as systemic operators — to prevent market failures. The theory, to preserve an open market and more level playing field for SMEs and market startups, while fermenting a greater sense of digital innovation and entrepreneurship within the EU. A greater sense of consumer protection and confidence is also at stake here.
According to Politico, the commission has yet to decide on the preferred option to deal with gatekeeper platforms. It is, however, considering "blacklists" and "whitelists" of prohibited behavior and obligations in four key digital services: app stores, marketplaces and social networks, which come under “online intermediary services"; online search engines; operating systems; and cloud services. For example, some of the commission’s draft provisions include preventing gatekeeper companies from favoring their own services on their platforms or from exclusively pre-installing their apps on operating systems.
The commission also proposes to update the e-commerce directive that was adopted 20 years ago to better reflect the contemporary and rapid digital transformation of the economy at large today. In a broad context, content moderation is at the heart of this particular proposal, looking to tackle areas such as illegal, counterfeit or unsafe product sales. Platforms and online intermediary services will need to improve their efforts to detect and take down false claims and root out rogue traders to protect consumers. In a similar vein, illegal and harmful content also needs attention and focus, harmful content, hate speech and disinformation should be addressed through enhanced transparency obligations and take-down measures.
Furthermore, there is also a particular mention of algorithm transparency regarding paid advertising and how new content is recommended to users. It is interesting to note that the European Parliament IMCO committee wants the commission to introduce a stricter regulatory regime — through the Digital Services Act — on targeted advertising and micro-targeting deployed through the collection of personal data and behavioral profiling in favor of less-intrusive methods that do not require extensive tracking of user interaction with content.
In its outline, some of the proposals are a clear indication of the EU’s bid to radically transform the regulatory landscape. All said, in the fast-moving world of globalized digital services, e-commerce and AI, pulling together an EU-wide legal framework is no easy task; moreover, one that can hold up internationally. Recently we have seen an array of challenges with the implementation of the GDPR, not to mention the perennial wait for the ePrivacy Regulation. Conversely, a fragmented decentralized EU regulatory landscape does not favor a strong unified geopolitical EU either. The truth, as often, is layered and somewhere in between.