The European Parliament has recently approved the Digital Markets Act (DMA) and the Digital Services Act (DSA). These acts are similar to the GDPR (General Data Protection Regulation) in that they set sweeping and detailed rules on how technology companies behave and impose heavy fines on those who violate them.
The DMA specifically deals with companies that are considered "gatekeepers", which are companies that provide core functions such as operating systems, social networks, online messaging, internet search, app stores, and online ads.
These gatekeepers are required to allow their messaging services to talk to each other and provide users with access to their information. Additionally, the law prohibits these companies from favoring their services over rivals or preventing users from removing pre-installed software or apps.
The DMA also establishes a "notice and action" regime that requires prompt removal of illegal content reported by users while demanding greater transparency about their enforcement. Other transparency rules relate to advertising algorithms and targeted recommendations, including a requirement that platforms provide a single "recommendation system" that is not based on a personal profile.
The law covers companies with at least 45 million monthly active users and 7.5 billion euros in revenue in the EU in the previous three years or a market value of at least 75 billion euros. Companies that violate the rules are expected to face heavy fines of up to 10% of their annual turnover, and up to 20% for repeat offenses.
On the other hand, the DSA requires online marketplaces to verify the identity of sellers using them and to conduct random checks for illegal goods or services offered on them. It also adds compliance requirements for "very large" online platforms, defined as those that reach more than 10% of the EU population (i.e., 45 million monthly active users or more).
These companies must regularly assess and mitigate the systemic risks of their services, including "any actual or anticipated negative effects on civil discourse and electoral processes."
The DMA and DSA are part of a wider effort by the European Union to regulate the digital economy and protect consumers. With the ever-increasing influence and power of tech giants, the EU sees the need to ensure fair competition and prevent anti-competitive practices. These acts will help to create a more level playing field and give consumers greater control over their data and online experiences.
While some tech companies have expressed concerns over the regulations and their potential impact on innovation and investment, others have welcomed them as a necessary step toward creating a more transparent and responsible digital economy. Ultimately, the success of the DMA and DSA will depend on how they are enforced and whether they can effectively balance the interests of consumers and tech companies.
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