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The European Commission announced the Digital Services and Digital Markets Acts in their battle to reign in the control and influence of tech giants who could face hefty fines up to 10% of annual global revenue for non-compliance and breakups. In the sights are social media platforms and online market places.

EU Vestager

The Digital Services Act (DSA) and Digital Markets Act (DMA) were originally scheduled to be announced at the beginning of December, were unveiled by Commissioners Thierry Breton and Margrethe Vestager during a press conference in Brussels.

The EU's competition chief, Margrethe Vestager, said Tuesday that the two proposals would ultimately serve a dual purpose. "To make sure that we, as users, have access to a wide choice of safe products and services online. And that businesses operating in Europe can freely and fairly compete online just as they do offline." "The two proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online," "And that businesses operating in Europe can freely and fairly compete online just as they do offline." .

The two pieces of legislation will need to be approved by European governments and lawmakers to come into affect. The DSA and DMA are major pieces of EU legislation, but expect it to be many years before they come into force. Europe's legislative process is complex and time-consuming, and before they pass into law there will be likely be multiple years of negotiations. The feeling by policy experts is that the adoption could be quicker-than-usual at the EU level.

The last two decades have seen rapid, all encompassing and life-changing advances in technology, The EU's legislation which governs the responsibilities of social media platforms and other online businesses such as online market places and other online platforms.that host other people's content has barely reacted in that time. The DSA package of laws aims to revisit old rules called the e-Commerce Directive, which hasn't been updated for 20 years.

The regulations are designed to both boost competition across the EU and keeping users safe from the plethora of ills and bad tidings they can potentially encounter online.

Large tech companies could face fines of up to 10% of their global revenue for breaking the rules, which could extend to billions of dollars, and will also face limits on how they can expand their businesses throughout Europe. EU regulators will be granted powers to break up companies. Importantly both Vestager and Breton have expressed on multiple occasions that this would be a last resort,  

The Digital Services Act will apply to all digital services operating across Europe and will include rules on:

  • The removal of illegal goods, services or content from online platforms
  • Users whose content has been mistakenly deleted by platforms
  • Large platforms preventing abuses of their systems
  • Transparency measures covering algorithms and online advertising
  • Allowing researchers access to key platform data for the purposes of scrutiny
  • Ensuring sellers of illegal goods and services can be traced and tracked down
  • Cooperating with public authorities to ensure effective enforcement

The second piece of legislation, the Digital Markets Act, will only apply to big companies that are seen as "gatekeepers."

It is designed to ensure that tech giants operating in Europe do not prevent news services, tools and companies from entering the market. The Commission did not name the companies that will be subject to the DMA in its proposals, but gave some idea of the criteria that will be used to define gatekeepers. They will include exceeding a European market revenue of 6.5 billion euros, being present in at least three countries and having at least 45 million active users per month.

"With today's proposals, we are organising our digital space for the next decades," said Breton. "With harmonised rules, ex ante obligations, better oversight, speedy enforcement, and deterrent sanctions, we will ensure that anyone offering and using digital services in Europe benefits from security, trust, innovation and business opportunities."


In the United States, the Federal Trade Commission is investigating how social media firms use personal data and drive user engagement. It also launched a case against Facebook over monopoly concerns.

Source: Reuters, EU

From The TradersCommunity News Desk

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