EU Parliament approves major new rules: DSA/DMA

EU legislators have passed a package of rules that have loomed over major online businesses since 2020 – the Digital Markets Act and the Digital Services Act – with the potential for impact far beyond Europe.

Why it matters

These two pieces of legislation cover competition law (designed to reign in the ‘platform’ giants) and new rules on all intermediaries, including algorithmic transparency that could be hugely significant to the advertising business. These are now set to become law, according to Reuters.

In principle

Both the DSA and DMA form part of a wider package, known as Shaping Europe’s Digital Future, the meat of which will hang on two aspects: 

• “To establish a level playing field to foster innovation, growth, and competitiveness, both in the European Single Market and globally. [Digital Markets Act]
• “To create a safer digital space in which the fundamental rights of all users of digital services are protected [Digital Services Act]

In practice

• The DMA revolves around the “gatekeeper” platforms that effectively function as multi-sided marketplaces with several opportunities to favour their own services on their own platforms. It is expected to mostly affect Google and Apple.
• The DSA is broader and more complex as it touches large and small ‘intermediaries’ and places new obligations on the policing of certain kinds of content and illegal products. Advertising to children or based on sensitive personal data will be curtailed. It also carries a privacy element, with new algorithmic transparency rules applied to big platforms (45m+ users).

Like other landmark pieces of EU legislation, critics frequently cite the problem of enforcing such broad new rules, which carry such heavy penalties – breaching the DMA and DSA can result in fines of 10% or 6% of global turnover.

The EU has said these rules will be enforced at a continental, rather than the national, level – likely a response to a significant criticism of the nationally, and quite rarely, prosecuted GDPR.  

In January, parliamentarians reported an onslaught of ads and lobbying against the law, suggesting that major interests see the threat inherent in these laws.

Key quote

As if to illustrate the sheer vastness of the new rules, here’s the world’s most famous regulator, Margrethe Vestager, EVP for Europe Fit for the Digital Age, summing up the rules in a statement to the press:

“The Digital Services Act enables the protection of users' rights online. The Digital Markets Act creates fair, open online markets”, she explains.

“As an example, illegal hate speech can also be dealt with online. And products bought online must be safe. Big platforms will have to refrain from promoting their own interests, share their data with other businesses, enable more app stores. Because with size comes responsibility - as a big platform, there are things you must do and things you cannot do.”

Next steps

While a lot remains to be seen, it’s time to prepare. From an advertising perspective, there is a lot in these rules that could profoundly affect the discipline. In April, Wavemaker’s Andrew Spurrier-Dawes wrote a neat explanation of the likely impact of the Digital Markets Act for WARC.

Sourced from WARC, Reuters, European Commission.