EU to make online platforms more accountable

Margrethe Vestager – Photo © European Union 2020

(BRUSSELS) – The European Commission proposed new rules for social media and online market places Tuesday, to better protect consumers and their rights online, and to create fairer and more open digital markets.

A ‘modern rulebook’ across the single market will foster innovation, growth and competitiveness and will provide users with new, better and reliable online services, says the EU executive.

It is also expected to support the scaling up of smaller platforms, small and medium-sized enterprises, and start-ups, providing them with easy access to customers across the whole single market while lowering compliance costs.

The new rules will prohibit unfair conditions imposed by online platforms that have become or are expected to become gatekeepers to the single market, says the Commission.

“The two proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online. And that businesses operating in Europe can freely and fairly compete online just as they do offline,” said EC vice-president Margrethe Vestager. She added that it was important that online shopping can be done in a safe manner and that we can “trust the news we read. Because what is illegal offline is equally illegal online”.

Despite significant benefits for consumers and innovation, online platforms have sometimes been used as a vehicle for disseminating illegal content, or selling illegal goods or services online, says the Commission. And some very large players pose particular risks for users’ rights, information flows and public participation.

Under the new Digital Services Act, binding EU-wide obligations will apply to all digital services that connect consumers to goods, services, or content, including new procedures for faster removal of illegal content as well as comprehensive protection for users’ fundamental rights online.

The Act will introduce a series of new, harmonised EU-wide obligations for digital services such as:

Rules for the removal of illegal goods, services or content online;
Safeguards for users whose content has been erroneously deleted by platforms;
New obligations for very large platforms to take risk-based action to prevent abuse of their systems;
Wide-ranging transparency measures, including on online advertising and on the algorithms used to recommend content to users;
New powers to scrutinize how platforms work, including by facilitating access by researchers to key platform data;
New rules on traceability of business users in online market places, to help track down sellers of illegal goods or services;
An innovative cooperation process among public authorities to ensure effective enforcement across the single market.

Platforms reaching more than 10 per cent of the EU’s population (45 million users) are considered systemic in nature, and are subject not only to specific obligations to control their own risks, but also to a new oversight structure. This new accountability framework will be comprised of a board of national Digital Services Coordinators, with special powers for the Commission in supervising very large platforms including the ability to sanction them directly.

The Digital Markets Act addresses negative consequences arising from certain behaviours by platforms acting as digital ‘gatekeepers’ to the single market. It sets out harmonised rules defining and prohibiting those unfair practices by gatekeepers and providing an enforcement mechanism based on market investigations. The Act will:

Apply only to major providers of the core platform services most prone to unfair practices, such as search engines, social networks or online intermediation services, which meet the objective legislative criteria to be designated as gatekeepers;
Define quantitative thresholds as a basis to identify presumed gatekeepers. The Commission will also have powers to designate companies as gatekeepers following a market investigation;
Prohibit a number of practices which are clearly unfair, such as blocking users from un-installing any pre-installed software or apps;
Require gatekeepers to proactively put in place certain measures, such as targeted measures allowing the software of third parties to properly function and interoperate with their own services;
Impose sanctions for non-compliance, which could include fines of up to 10% of the gatekeeper’s worldwide turnover, to ensure the effectiveness of the new rules. For recurrent infringers, these sanctions may also involve the obligation to take structural measures, potentially extending to divestiture of certain businesses, where no other equally effective alternative measure is available to ensure compliance;
Allow the Commission to carry out targeted market investigations to assess whether new gatekeeper practices and services need to be added to these rules, in order to ensure that the new gatekeeper rules keep up with the fast pace of digital markets.

The European Parliament and EU Member States will now discuss the Commission’s proposals. If adopted, the final text will be directly applicable across the European Union.