Digital Services Act and Digital Markets Act

The Digital Services Act and Digital Markets Act are two recent landmark legislations from the European Union. The draft legislation gives specific regulations to limit the powers of global internet companies like Google, Apple, Facebook and Amazon in the European market. Under the legislation, the larger firms are designated as ‘digital gatekeepers’ and would be subject to stricter regulations. Violation of competition rules could invite as much as 10% of the firm’s annual turnover.

Digital Services Act

Digital Services Act aims to create uniform framework throughout the European Union in handling potentially harmful content online, protection of users’ fundamental rights online, liability of online intermediaries for third party content and bridging the information asymmetries between online intermediaries and their users.

Key features of Digital Services act

  • The act makes it mandatory for every host provider to put in a user-friendly notice that provides permission to notify about illegal content.
  • The online platforms have to establish internal complaint handling systems. In order to resolve disputes with their users, the online platforms should engage with out-of-court dispute settlement bodies.
  • New transparency obligations have been included. When a content is removed, an explanation should be provided to the person who uploaded the content.
  • The act imposes fine for non-compliance up to 6% of the annual income.

For every advertisement and to every user the online platform should provide clear information. It includes the following

  • The user should be clear that he or she is watching or seeing an advertisement.
  • The advertisement should be very clear in conveying the fact that on whose behalf it is being displayed.
  • It should provide meaningful information about main parameters so that the user is able to determine why he or she is targeted by this ad.
Very Large Platforms
  • The Digital Services act defines the very large online  platforms as those with more than 45 million users. This is roughly equal to 10% of European Union population.
  • The very large platforms upon request, must allow access to the data required to monitor their compliance within the Data Service Act.
  • The very large platforms should provide transparency on main parameters of decision making algorithms. These algorithms are usually used to offer content on their platforms, basically the ranking mechanism.

Digital Markets Act

  • The Digital Markets Act addresses the digital market imbalances in the European Union.
  • Digital market act is applicable only to provider of core platform services. This includes social networking services, search engines, operating systems and online intermediation services.
  • Just like very large platform under Digital Services act, the digital market act brings upon the notion of gatekeeper. The European Union will designate a provider of core platform services as a gatekeeper if the provider fulfills the following conditions.
    • The provider should be active in multiple European Union countries. The provider should have an annual turnover of at least 6.5 billion Euros in the last three financial years.
    • The provider should have strong intermediation position. The provider company should be capable enough to link a large user base to a large number of businesses. In other words, the company should operate with more than 45 million monthly active users in European Union.
  • The gatekeeper platforms should comply with defined set of obligations to avoid unfair practices. It includes obligations to ensure interoperability within its own platform, obligations to share data generated by their customers for business users.
  • Under the Act, The European Union shall impose fine till 10% of the annual turn over of the firms.


Leave a Reply