Digital Services Act (DSA) – Timeline

The Commission's goal behind the Digital Single Market Initiative is to lay the foundation for Europe's digital future. Even back then, in 2015, the EU Commission named as essential steps to achieve this goal the measures that are also reflected in the subsequent descriptions of the DSA: 1) bringing about better access for consumers and businesses to digital goods and services throughout Europe, 2) creating the right conditions and a level playing field for thriving digital networks and innovative services, and 3) making the best possible use of the growth potential of the digital economy.

The aim of the digital strategy is to strengthen the digital single market by harmonizing EU-wide regulations. In particular, the Digital Services Act is intended to (1) regulate the responsibilities and obligations of digital services in a uniform manner and adapt the regulations to the state of the art, (2) ensure better protection of citizens and their rights in the digital space, and (3) remove barriers to competition and promote innovation and growth.

The Commission publishes an Inception Impact Assessment, in which different regulatory scenarios with varying level of regulatory detail are proposed. Among other things, the possibility of regulating online platforms with market power is considered in order to counteract so-called gatekeeper and network effects. Secondly, the creation of a "New Competition Tool" is being discussed, which is intended to better capture competition law problems in the digital economy. During the consultation phase, companies, associations and other stakeholders are invited to provide feedback on the proposals. The first concrete legislative changes are being considered, for example changes in the context of the e-commerce directive and the product safety directive.

The proposals for the New Competition Tool and the feedback received so far can be found here.

Stakeholder feedback has been obtained and the consultation phase has ended. The next step is the publication of a first draft law on the DSA. This is expected in the fourth quarter of 2020 or first quarter of 2021. The following points in particular were discussed intensively during the consultation phase and it remains to be seen in what form - if at all - they will find expression in a first draft: a) availability of an opt-out option shall be mandatory for users with regard to individualized advertising on platforms; b) renunciation of the liability privilege and notice-and-take-down mechanism for platform operators; c) Greater transparency about the functioning of algorithms on recommendation platforms ("self-preferencing"); d) Improved interoperability between different digital services ("messaging from WhatsApp to Telegram").

A summary with the most important questions regarding the Digital Services Act has been available for some time in our whitepaper (as of September 2020) on the topic.

On December 15th, the Commission presented a first draft of the Digital Services Act as well as the Digital Markets Act after several postponements of its publication.

Digital Services Act: In this over one hundred page long draft document the Commission has laid out in five chapters the new obligations of different online players. While the draft and chapters I and III through IV contain the catalogue of obligations of the so-called “intermediary services”, also many of those which were heavily debated in the consultation period, the draft in fact opens up with rights instead of obligations. Chapter II of the draft addresses and clarifies the already existing legal situation regarding exemptions from liability for certain players (mere conduit, caching and hosting services). The following chapters set forth cooperation, compliance and transparency obligations for the affected intermediary services respectively platforms. However factually any company, which is active in online business, is affected by these new rules, since part of the new obligations of the intermediary services is also – to some degree – a validation of references of any involved third party trader. The current draft of the DSA makes it clear that any company involved in online marketing and/or trade must keep an eye on the developments.

Digital Markets Act: The regulations of the DSA initiative by Commission which affect competition and fair market practices have been outsourced to their own respective twin draft of the DSA: the DMA. The aim of the DMA is to solve structural competition problems that are not adequately covered by existing competition law. The addressees of the planned regulation are so-called gatekeepers, whose market power impedes or completely prevents the market entry of smaller competitors. The draft contains a list of prohibited unfair business practices and those that are not prohibited per se but can be reviewed in individual cases. Self-referencing, a practice in which platforms primarily advertise their own products or the exclusive use of data to cement their own market dominance, will no longer be permitted. Also new is that gatekeepers will require user consent for the aggregation of user data from their own various services or from third-party providers.       

We'll keep you updated and a summary of developments so far can always be found on this timeline page here. Further important information for the digital industry can be found here.

Author: DL

Until the end of March, the European Commission is asking for feedback on the drafts of the Digital Service Act and the Digital Markets Act published in December 2020. The comments are published on the Commission's website and, at the end of the deadline, handed over to the European Parliament and the Council so that they can take the comments into account in their decision-making. Only if the Parliament and the Council have approved it, the acts will enter into force.

True to their names, both the Digital Services Act and the Digital Markets Act (as drafted in December 2020) are intended to regulate the digital economy. The same goal is now being pursued by the German legislature as part of the 10th GWB amendment, which is also referred to as the "GWB Digitization Act". The aim is to make antitrust law, which predates digitization, fit for the future. The GWB amendment includes innovations such as the assessment of data access and network effects as criteria for market dominance under competition law. In addition, it provides the Federal Cartel Office in particular with new sanctioning instruments. At the present time of the entry into force of the GWB amendment, it is still unclear whether and, if so, how possible changes and adaptations at European level with regard to DSA and DMA will affect national legislation and case law.

We'll keep you updated and a summary of developments can always be found on this timeline page here. Further important information for the digital industry can be found here.

Author: DL