EU’s Digital Services Act Advocates Speak Up

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Like all regulations, the new Digital Services Act brewing in the European Union has its detractors (those who will be regulated) and its fans (those who are writing the regulations). Somewhere in between are consumers. And as the EU government plans on releasing a draft of the DSA, its advocates are starting to lay out the potential benefits.

The DSA, now scheduled for a Dec. 9 publish date, basically concerns itself with two issues: competition and content. Because it deals with potential antitrust issues, it’s understandable that the Big Tech companies, in particular Google, have lobbied against it. The issues stated by EU legislators have wasted no words about its intent. “It is indeed to prevent a situation like the ones we have had with the Google (antitrust) cases so that we still would have competition,” the EU’s digital chief as well as its top antitrust enforcer Margrethe Vestager told Reuters early in the summer.

For its part the companies involved have been keeping their comments close. YouTube Chief Product Officer Neal Mohan warned against it earlier this fall, saying, “Anything that the DSA does has to apply to all companies, all platforms, not just the large ones but the small ones as well. Platforms that are small today can become large in a matter of months.”

The section of the “New Competition Tool” within the DSA is being developed to address those potential antitrust issues and to give the EU ways to address the speed of the digital economy. The current framework for digital services is built around a statute developed in 2000, that mostly regulates cross-border services and “minimum standards of liability for online intermediaries.” Throw in the Brexit controversy as well as the speed and scale of the digital world and government entities felt like they had a weak set of laws to address the current state.

“Overall, it is the intention of the Commission to use this law to prevent fast-moving digital markets from “falling” too far towards a particularly dominant company,” said law firm DLA Piper in its opinion on the DSA. “Digital markets evolve so swiftly, and the subtext of the legislative proposal is clearly that existing measures are insufficient to manage this. In addition, there is a clear intention to open up and invigorate markets that for a variety of reasons may not be functioning properly, most likely because there are underlying structural issues. In terms of opening up markets, it seems clear that the scope of this new legislation would go beyond digital markets — that this could be applied more broadly.”

Opening markets, according to the DSAs supporters, will open economic opportunity. Its detractors say it will stifle innovation. “Europe leads on regulation, but regulation is not a means to all ends,” read a letter from the European Tech Alliance (EUTA), a group that represents some of Europe’s largest technology champions and scaleups, including Allegro, Booking.com, Criteo, FacilityLive, King, Meetic, Spotify and Zalando. “The majority of European tech companies are young, and fragile, although growing. To nurture their growth, we need smart regulation that creates a truly vibrant Digital Single Market and that doesn’t put our future champions at a disadvantage when competing locally but also internationally. Now that the EU is a first-mover on digital regulation, ahead lies the challenge of how we can leverage this advantage into tangible growth for our economy.”

Because it also concerns itself with content, the DSA is expected to force tech companies to detail their algorithms and make transparent their processes for putting content on their platforms. That’s another reason why companies like Google and Facebook are lobbying against it. According to the Disruptive Competition Project, the DSA will aim to establish “clear, updated, and binding rules” to counter hate speech and regulate “opaque political advertising.” The DCP believes its toughest task will be striking a balance between protecting freedom of speech and protecting the right to free speech.

The DCP praised the major content platforms for working to curtail hate speech. It is perhaps not surprising that bad actors seek to exploit online systems. For instance, it singled out YouTube, which reported that between July and September 2020, it removed 7.9 million problematic videos. Of these, 43 percent had not been viewed, and 76 percent had received fewer than 11 views. Yet the DCP still sees the need for regulations.

“The DSA can deliver real value to Europeans by harmonizing rules to help create a single set of rules for the entire EU Single Market,” it said. “This can be achieved through a strong ‘country of origin’ principle, meaning that a company can access the whole single market under the rules of the EU country in which it is established, instead of having to comply with 27 different national rules. Harmonization not only helps businesses, but can also protect consumers. Harmonization of ‘notice-and-takedown’ procedures, for example, can improve the quality of the notices received from consumers, companies, and national authorities to enable digital services to be more effective in their take-downs.”

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