What are the Digital Market and Digital Services Acts?

While the Digital Markets Act and the Digital Services Acts were agreed upon on March 25, 2022 and April 23, 2022 respectively, the laws were only passed on July 5, 2022. 

Big Tech companies are going to have to re-examine the way they do business in the European Union, as lawmakers of the organisation have established new rules that will change the way tech businesses will operate. 

Also Read: European Union makes historic tech ruling, enforcement worries remain

What is the Digital Markets Act?

Simply put, the DMA focuses on regulating the markets within the tech industry. The Act has basis in Article 101 and 102 of the Treaty on the Functioning of the European Union. Article 101 has to do with anticompetitive agreements and any market behaviour that can negatively affect trading between member nations and can affect competition in the market. 

The DMA will primarily affect the big names from Silicon Valley, i.e., companies like Amazon, Google, Apple, Microsoft. The new law classifies these companies as ‘Gatekeepers’ thanks to their size, user base, market reach and capitalisation. Gatekeepers, according to EU lawmakers, provide “core-platform services” making them the most likely to be engaging in unfair business practices. 

In order to combat this, EU lawmakers have decided that platforms like WhatsApp, Messenger and iMessage must make their platforms accessible to smaller businesses providing similar services. This kind of interoperability would allow users on both small and large platforms to freely exchange information, videos, images, promoting a healthier market. 

Not only that, but business users would be able to also use these platforms to promote their products and services and instead of using one particular platform to make a sale, they will be able to make deals with customers off a platform. The ramifications for businesses who fail to comply will be fined 10% of their worldwide turnover.

What is the Digital Services Act?

The DSA is a smaller but nonetheless crucial piece of legislation from the EU. The law is aimed at creating a “safer digital space where the fundamental rights of users are protected and to establish a level playing field for businesses,” according to the European Commission’s website. 

The Digital Services Act is a citizen-oriented law, which seeks to better protect the rights of consumers, provide them with more choices, and reduce their exposure to illegal content. In addition, the law seeks to protect the rights of children, and in a bid to do so, lawmakers have made the use of targeted advertising towards them illegal. It also prevents targeted advertising on the basis of religion, gender, political opinions and race. 

The law also makes the use of dark patterns illegal, a data acquisition tactic which leads people to give up their personal data to tech companies. The fine for flaunting these rules can lead to businesses being fined 6% of their annual turnover.

The DMA will begin to apply six months after it is formally adopted and companies will be given the same amount of time to comply with the regulations. The DSA on the other hand will become enforceable 15 months after it is adopted or from January 1, 2024.