Impact of the EU Digital Services Act and Digital Markets Act on Tech Corporations
The European Union has taken significant steps towards creating a more balanced and secure digital environment with the introduction of the Digital Markets Act (DMA) and the Digital Services Act (DSA), both released in October 2023.
The Digital Markets Act (DMA) is primarily concerned with ensuring fair competition among large digital platforms, often referred to as "gatekeepers." These include online search engines, app stores, and messenger services. The DMA aims to address concerns about the market power and behavior of these platforms, creating a fair and competitive digital environment.
The DMA establishes specific obligations and prohibits certain practices for designated gatekeepers to ensure fair competition. Gatekeepers are required to provide data access and ensure interoperability with other platforms, treat businesses fairly and not discriminate against them, provide clear terms and conditions, and face sanctions for non-compliance.
On the other hand, the Digital Services Act (DSA) focuses on regulating how digital services interact with users. The DSA aims to provide better protection to online users' rights, harmonize rules for digital services, increase transparency and accountability, increase cooperation and enforcement, and enhance market supervision.
The DSA dictates new rules for very large online platforms (VLOPs) and very large online search engines (VLOSEs) to ensure that they are responsible for the posted content and that users' data is respected and secured. The DSA also aims to give users more control over their digital experience, including the ability to contest decisions made by platforms regarding their content and ensure transparency in terms of how their personal data is collected and used.
The main difference between the DMA and the DSA lies in their focus. While the DMA regulates how large digital platforms compete and behave in the market to ensure fair competition and prevent abuse of market power, the DSA regulates how digital services interact with users, focusing on user safety, content moderation, transparency, and accountability of online intermediaries and platforms.
Together, these two acts form the EU's Digital Services Package, aimed at making the internet both safer and fairer by addressing market competition (DMA) and service regulation/user protection (DSA). The DSA package will require EU member states to transpose the provisions of the DSA into their national legislation, with the DSA becoming fully applicable to all entities beginning from 17 February 2024.
References: [1] European Commission. (2023). Digital Markets Act. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12527-Digital-Markets-Act-DMA
[2] European Commission. (2023). Digital Services Act. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12526-Digital-Services-Act-DSA
[3] European Commission. (2023). Digital Services Package. Retrieved from https://ec.europa.eu/info/strategy/priorities-digital-era/digital-services-package_en
[4] European Commission. (2023). Explanatory Memorandum on the Proposal for a Regulation of the European Parliament and of the Council on a Single Market for Digital Services (Digital Services Act). Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12526-Digital-Services-Act-DSA/document/DSA-Explanatory-Memorandum_20201216_EN.pdf
[5] European Commission. (2023). Explanatory Memorandum on the Proposal for a Regulation of the European Parliament and of the Council on Contestable and Fair Markets in the Digital Sector (Digital Markets Act). Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12527-Digital-Markets-Act-DMA/document/DMA-Explanatory-Memorandum_20201216_EN.pdf
The DMA, in its provision to ensure fair competition among digital platforms, mandates designated gatekeepers to provide data access and ensure interoperability with other platforms, a move that could potentially revolutionize the way technology and finance interconnect.
With the DSA's focus on user safety and content moderation, there may be a shift in technology towards more secure and privacy-focused solutions, which could have significant implications for the finance sector, as secure data storage and handling become increasingly crucial.
