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DUBLIN – The European Union’s expansive new rules for overseeing the region’s digital economy have a lot to offer the industry, but they are far from being set in stone.
The Digital Services Act and Digital Markets Act aim to revise the way big tech companies and digital services work, from moderating illegal and harmful content to curbing excess competition.
In an industry with billions of dollars involved, these two pieces of legislation will go through various debates, lobbying efforts, and tweaks.
Cecilia Bonefeld-Dahl, general manager of DigitalEurope, a trade association with members like Facebook and Google, said it broadly supports the digital services law, but the digital markets law has yet to be improved.
“We believe that the (EU) Commission has struck the right balance with the DSA proposal. The DSA is extremely important to our industry and we hope that this balance will be maintained during the legislative process,” she told CNBC.
Industry, civil society groups, member states and legislators in the European Parliament are all now fighting for their position to have their say before their final decision.
The proposals in their current form may look different at the time of their adoption and all sides have argued their case. They could be strengthened in upcoming talks with Member States and legislators, a normal process in the EU. Given the importance of the new rules to the industry, many stakeholders are likely to try to shape them.
The scope of the Digital Services Act is broad, including the online advertising industry, how businesses should moderate their platforms for malicious and illegal content, and overseeing the online sales of counterfeit goods.
Karolina Iwańska, legal and policy analyst with Poland’s Digital Rights Group, Panoptykon Foundation, said the DSA still lacks some power in tracking and targeting users.
“There should be some clear red lines and boundaries on what is allowed in this regard, especially in terms of constantly monitoring user behavior to target content, and by this I don’t just mean ads,” she told CNBC.
She said her organization is not against targeted content or advertising, but that there must be firm and clear guidelines.
“We advocate that ads should be based on data expressed or provided directly by people. If I state that I am a woman living in Warsaw at that particular age, this should be the information you can provide if you want to direct an ad to me. “
The moderation of content, a hot button issue, will give rise to further debate. This includes questions about how to distinguish between illegal and harmful content and what expectations platforms have in terms of behavior.
Maria Luisa Stasi, a senior legal advisor to Article 19, an NGO that focuses on the right to freedom of expression, said these distinctions are open to many interpretations.
“I think we are mainly concerned with how the notification and shutdown procedures are designed,” she said.
The European Parliament is currently considering the law on digital services. The Danish legislator Christel Schaldemose is the Parliament’s rapporteur for the legislation. You recently commented on the proposal had to be stepped up to combat counterfeit goods.
She told CNBC that it is considering the European Commission’s proposal as it prepares its own report, due to be released on May 28.
“After that, the deliberations and negotiations between the political groups in Parliament will start. I expect that they will continue throughout the autumn,” she said.
The law on digital markets has now sparked other debates. While DigitalEurope believed the DSA had a solid balance, Bonefeld-Dahl believes the new rules for market activity may be too broad.
“While there are legitimate concerns about digital markets, we should avoid blunt tools that could hinder innovation and market entry,” she said.
One of the main problems is the definition of so-called gatekeepers. These are the very big players that are likely to include Google and Amazon with a large user base. The rules would require them to open the hood on their platforms to allow other smaller businesses to access data and introduce more advertising transparency.
“It is important that the DMA takes into account the particularities of certain business models and market conditions. The requirement of a fair hearing with a proper procedure and sufficient legal certainty must be complied with in all these new measures,” said Bonefeld-Dahl.
Luisa Stasi from Article 19 said that the definition of a gatekeeper can depend not only on how large a platform is, but also has to take into account its influence, regardless of the size and handling of the privacy of the users.
“The DMA is critical for us as a tool to create a more decentralized and diverse environment for online, social media and communication channels in general,” she said.
“These standards (for determining gatekeepers) may not only be economical. These standards are not just the price of a service, but also the quality of a service, and the quality of a service can include how privacy-friendly it is,” she added .
The EU’s new competition rules are being drafted at a time when big tech and the power and influence these companies wield are being billed for.
In the UK, for example, the competition and market regulator set up a unit in its ranks to investigate digital cases, following a series of key probes the watchdog launched on Facebook, Uber, and others.