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European Parliament adopts Digital Services Act and Digital Markets Act

The European Parliament announced the adoption of the Digital Services Act (DSA) and Digital Markets Act (DMA) to address the societal and economic effects of the tech industry in Europe.

The DSA sets strict obligations for digital service providers (such as social media companies) to limit the spread of illegal content, online disinformation, and other societal risks. New obligations of the DSA include:

  • measures to counter illegal content online and obligations for platforms to react quickly (whilst respecting freedom of expression and data protection rights)
  • strengthened traceability and checks on traders in online marketplaces
  • increased transparency and accountability of platforms, and
  • bans on misleading practices and certain types of targeted advertising, especially ads targeting children and dark patterns.

Organisations with more than 45 million monthly users will also be subject to further obligations to prevent systemic risks, obtain independent audits, and facilitate authorities’ access to their data and algorithms.

The DMA imposes new obligations for larger online “gatekeeper” platforms to ensure fair competition in the market and equal access to consumers. The limit the power of gatekeeping platforms, the DMA requires that gatekeepers allow third parties to inter-operate with their own services and allow business users to access the data they generate. Furthermore, gatekeepers can no longer rank their own services or products more favourably, prevent users from easily uninstalling any preloaded software or apps, and process users’ personal data for targeted advertising.

To ensure compliance with the DMA, the Commissioner may carry out investigations into the platforms and issue fines of up to 10% of its total worldwide turnover in the proceeding financial year, or up to 20% in case of repeated non-compliance.

The DMA and DSA are set to be formally adopted later this year (July and September respectively). The Acts will then be published in the Official Journal of the European Union and will enter into force 20 days after publication. The DA will be directly applicable across the EU and will apply 15 months, or from 1 January 2024 (which comes later), after the entry into force. The DMA will apply 6 months after it enters into force and gatekeepers will have a maximum of 6 months after they have been designated to comply with the obligations.

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