Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Friday, June 17, 2022

European law on digital services marks a new regulatory paradigm.

Known as the DSA (Digital Services Act), it makes platforms responsible for the content they publish. It also forces them to share data with advertisers and open their algorithms to scrutiny by regulators. It will be passed in July, which complements another piece of related proposed legislation, the DMA.

The delegation of European legislators that visited Silicon Valley in the last week of May left with a bittersweet taste in their mouths. It could not have been otherwise, as they had the news that both the Digital Services Act (DSA) and the Digital Markets Act (DMA) would be approved by the European Parliament before the July recess.

The technology giants that served as hosts were the same ones that will be subject to the new regulation that in Europe is considered unique worldwide and that in the United States, behind the scenes, is seen as a misplaced regulatory interference.

During the trip, the European delegation held meetings with representatives of Google, Meta, Apple, Airbnb, eBay, Paypal, Uber, Salesforce, Cloudfare, AT&T, HP, Argo AI and video game developers, as well as representatives of Stanford University's Center for Internet and Society and the Electronic Frontier Foundation.

Germany's Andreas Schwab, head of the delegation, revealed in a statement that "U.S. companies and experts were very interested in Parliament's role in the process." He added: "Their comments were mostly positive, although we will have to see how contentious or litigious they will be once the WFD and DSA come into force."

Schwab's caution is related to the public opposition already voiced by companies, analysts, lobby groups and lawyers to both rules.

The DSA forces online platforms to take responsibility for users' posting of illegal and harmful content. And, just as important, it forces them to share how their algorithms work. The hand of European regulators goes even further, as they will have the authority to implement processes to quickly remove illegal content and crack down on users who spread misinformation.

The debate in the United States regarding the wisdom or otherwise of Meta and Twitter's decision to suspend accounts of people involved in the events of January 6, 2021 on Capitol Hill in that country, starting with the then President Donald Trump, highlights the distance that exists between the two sides of the Atlantic when it comes to taking such "crackdowns" against users for the content they post.

According to the timeline announced by the EU, and if the prediction of its legislative approval in July is fulfilled, the DSA would only come into force on January 1, 2024. But online platforms and search engines classified as "very large" (those with 45 million users or more, such as Google, Twitter, Facebook and Instagram, Meta, Bing and others) will be subject to the terms of the DSA at the end of this year. 

But the regulation reaches more than search engines and social linking platforms. The list is longer and includes online marketplaces, content sharing platforms, app stores, online travel platforms, hosting platforms, intermediary services such as Internet providers and domain registrars, web and cloud hosting services, as well as collaborative economy platforms. The DSA also applies to gatekeeper platforms or "gatekeepers," defined as those with "a systemic role in the internal market that function as bottlenecks between businesses and consumers for important digital services."

Big tech's rejection of the regulation has to do with two main aspects: increased costs and loss of dominant position that could lead to lower profits and controls that could tie their hands in the face of future initiatives. In addition, they also point out that the joint action of the DSA and the DMA enhances the regulatory effects.

On the first aspect, the regulations mandate dedicated staff to respond to (and "cooperate" with) regulators and consumer concerns. It is not yet clear what level of expenditure this provision will represent, but it will have to be taken into account.

More serious is the loss of dominance, as in the case of online advertising. By the addition of the DSA and the DMA, gatekeepers such as Google and Facebook will have to share data, not all, with companies that want to advertise goods and services online. The issue is that, so far, Google and Facebook sell that same data. And at the same level of controversy is the obligation to disclose the algorithms that run the platforms. Regulators will have access to key data from the largest search engines to inform their understanding of how online risks evolve.

As with everything, there are critics of the two rules, which they describe as "tepid." This is the case of the EBU (European Broadcasting Union), which said: "Contrary to our expectations, the Regulation will fall short in providing public service media with the necessary tools to react to and challenge unfair and arbitrary decisions by platform operators regarding their content." He added: "Unfortunately, the complaint procedures provided for in the DSA will take too long if platforms mistakenly block applications or entire media accounts or remove editorial content, in particular time-sensitive content such as news or current affairs programs." EBU called for "direct and well-functioning communication channels with platform operators to resolve any disputes as quickly as possible."

 

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