THE DIGITAL SERVICE ACT PACKAGE A Cicero/AMO Overview
August 2020
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The Digital Service Act Package In February 2020, the European Commission set out its vision for “Shaping Europe’s Digital Future”. This focused on three key objectives: developing and deploying technology that works for people; a fair and competitive economy; and an open, democratic and sustainable society. As part of the key actions to achieve these objectives, the Commission launched a consultation on the Digital Services Act (DSA) package in June 2020. This note sets out the DSA package: policy objectives; problems the initiative aims to solve; policy options; preliminary feedback and next steps. Policy objectives The DSA package is based on two pillars: a revision to the existing eCommerce rules and a proposed new ex ante regulation tool for markets characterised by large platforms with significant network effects, so-called “gatekeeper” platforms. The eCommerce Directive is the legal framework to provide digital services across the EU’s single market. But having been implemented in 2000 – in a world barely recognisable to the super-digitised one in which businesses and consumers exist today – it is out of date. The review aims to modernise the digital legal framework, including the establishment of a more effective governance system. The DSA package also acknowledges the acute concentration of economic power that has emerged with some platform providers, which is not effectively addressed through current antitrust rules. Tackling the impact of these “winner-takes-all or most” platforms is at the heart of the second pillar, where the Commission is exploring an ex ante regulatory instrument. This second pillar builds on the Platform-to-Business (P2B) Regulation, which entered into force on 12 July 2020, and was viewed as the first step towards establishing “a fair and transparent business environment around online platforms”. The ex-ante regulatory instrument is closely linked and potentially overlaps with the Commission initiative for a New Competition Tool launched simultaneously. Key problems The DSA package aims to tackle a multitude of issues that have arisen in the digital age, while preserving the clear benefits and efficiencies this new world has brought too. Member states’ laws have becoming become increasingly fragmented with respect to digital service providers. Illegal or unsafe good are being sold online to EU citizens. Harmful content and fake news are being disseminated. Meanwhile, platform power has becoming increasingly concentrated. This has reduced the bargaining power of traditional businesses that have no option other than to use these platforms. Data has also become a major issue. The unique data advantages these platforms acquire has also undermined traditional business models. And the extent of data collection – and the lack of data sharing – has become a major concern for companies and consumers alike. It is these, and other key problems, set out in Table 1, that the DSA package aims to address.
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Table 1: Key problems the dual DSA pillars aim to address Review of the eCommerce Directive
The ex ante regulatory instrument
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Fragmentation in the Single Market and the need for reinforced cross-border cooperation. Risks for the safety of citizens online and the protection of their fundamental rights. Significant information asymmetries and ineffective oversight across the single market.
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Traditional businesses are increasingly dependent on a limited number of large online platforms, leading to an imbalance in bargaining power. Increased barriers to entry for innovative digital firms and start ups. The ability of large online platforms to comparatively easily enter adjacent markets.
Policy solutions The Commission is considering several policy options under each pillar, summarised below. For the e-Commerce directive, this ranges from a limited legal instrument, laying out the responsibilities of online platforms in critical areas, to the creation of a system of regulatory oversight, enforcement and cooperation across member states, supported at EU level. The ex-ante regulation consultation considers options, ranging from the revision of the existing P2B Regulation to the adoption of tailor-made remedies for online platforms, applied on a case-by-case basis and enforced by either national regulators or at the EU level.
Table 2: Policy options of the dual DSA pillars Review of the eCommerce Directive
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A limited legal instrument to regulate online platforms procedural obligations. A more comprehensive legal intervention, updating and modernising the eCommerce Directive. Options for creating an effective system of regulatory oversight, enforcement and cooperation across Member States, supported at EU level.
The ex ante regulatory instrument • • • • •
Revision and extension of the P2B Regulation. Adoption of a horizontal framework empowering regulators to collect information from large online platforms acting as gatekeepers. Adoption of a new and flexible ex ante regulatory framework for large online platforms acting as gatekeepers: Prohibition or restriction of certain unfair trading practices by large online platforms acting as gatekeepers (“blacklisted” practices”). Adoption of tailor-made remedies addressed to large online platforms acting as gatekeepers on a case-by-case basis. 3
Preliminary feedback and opinions The Commission’s consultation on the Digital Services Act launched in June seeks to gather views, evidence and data from people, businesses, online platforms, academics, civil society and all interested parties to help shape the future rulebook for digital services. Stakeholders had the opportunity to provide comments on the Commision’s three initial roadmaps by 30 June, whilst longer questionnaires with broader questions on the Digital Services Act and the New Competition Tool, are open until 8 September. It is no surprise the opportunity to shape this potentially major overhaul of Digital Services in the EU has prompted feedback from the GAFA big four (Google, Apple, Facebook and Amazon), leading EU digital companies, as well as consumer organisations and business user representatives. Next steps The DSA package consultation closes on September 8th 2020. The European Parliament Internal Market and Consumer Protection (IMCO), the Committee on Legal Affairs (JURI) and the Civil Liberties, Justic and Home Affairs Committees (LIBE) are expected to adopt their own initiative reports in September, with the Commission’s legislative proposal expected in Q4 2020 or Q1 2021.
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Sarah Cuvellier Head of EU Public Affairs sarah.cuvellier@cicero-group.com +32 (0)48 658 9156
Natalie Dempster Head of EU Research and Macro Policy Lead natalie.dempster@cicero-group.com +32 (0)2 612 8160
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