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EU approves ‘global first’ digital legislation

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European lawmakers have approved the Digital Markets Act and the Digital Services Act, two key pieces of legislation that will regulate online markets and limit the power of some of the world’s biggest tech companies.

The European Parliament has given its approval to two landmark rules that seek to curb the power of tech giants such as the Alphabet unit Google, Amazon, Apple, Facebook and Microsoft.

With the passage of Digital Markets Act (DMA) and Digital Services Act (DSA), the EU is creating what it describes as a “regulation” for online platforms, with the aim of creating “a safer and more open digital space, based on respect for fundamental rights”.

While the DSA focuses on targeting content deemed illegal in Europe, making platforms responsible for removing it, the DMA aims to curb anti-competitive behavior and prevent “gatekeepers” from suppression of competition in the market. Fines for non-compliance can be up to 6% of annual worldwide revenue for DSA violations, and up to 10% for DMA violations.

“The European Parliament has adopted a world first: strong and ambitious regulation of online platforms,” said EU antitrust chief Margrethe Vestager.

“The Digital Services Act allows the protection of user rights on line. The law on digital markets creates fair and open online marketplaces. Because with size comes responsibility – as a big platform, there are things you have to do and things you can’t.

To combat what it considers to be unfair trade practices, tThe DMA is set to require Big Tech companies such as Apple, Google, Amazon, Facebook and Microsoft to make their email services interoperable with third parties and provide business users with access to the data they generate to promote their own offerings and enter into contracts with customers outside of the host platform, EU said.

In contrast, the DSA prohibits advertising targeted at children or based on sensitive data such as religion, gender, race, and political opinions, as well as prohibiting “dark role models,” tactics that incite people to provide personal data to online businesses.

However, despite the EU’s commitment to regulating Big Tech, enforcement of the new legislation could also become problematic due to the limited resources of regulators.

“We sounded the alarm last week with other civil society groups that if the Commission does not hire the experts it needs to monitor Big Tech practices in the market, legislation could be crippled by ineffective enforcement,” said Ursula Pachl, deputy director-general of the European Consumers’ Organisation.

Last year it was revealed that 612 companies, groups and associations spend more than €97m (£83m) a year lobbying against EU digital economy policies, in particular the DMA and DSA, with lobbyists involved in three-quarters of the 270 meetings Commission officials had on the two bills.

The new rules will be applied by the Commission for “the largest online platforms active in the EU” after their formal adoption by the Council of the European Union and their publication in the Official Journal. Both laws will then come into force this fall.

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