New European digital market regulations: the Digital Services Act and the Digital Markets Act

The two most important legislations regulating digital services and companies – previously adopted by the European Union – entered into force, namely the Digital Markets Act (DMA) on 1 November 2022 and the Digital Services Act (DSA) on 16 November 2022. The legislation aims at creating a safer digital space where users' fundamental rights are protected, as well as an open and a level playing field for digital businesses. The introduction of sectoral regulation of digital markets at the EU level was necessary, since certain market practices of the largest "big tech" companies in the online space, while detrimental to open, fair competition and consumer choice, were outside the scope of competition law, or competition regulation did not provide an effective solution to the problems.

At the heart of the DMA regulation are the so-called gatekeepers: they are the inescapable players in the digital world, who, by virtue of their market position, act as the "gateway" between businesses and users (consumers) in the online space. The term gatekeepers include, for example, the operators of the largest social networking sites, operating systems, search engines, browsers, marketplaces, and content-sharing services. The legislation sets out an objective list of criteria to identify the largest players (those with the highest number of users, revenue or market value) in the EU digital markets, which will be registered by the European Commission. The DMA imposes several obligations on gatekeepers, such as ensuring that they can easily unsubscribe from their services, that pre-installed software can be removed, and that they are not allowed to prevent their business users from advertising, doing business or pricing outside the platform. To enforce these obligations, the legislation gives the European Commission wide powers to fine gatekeepers up to 10% of their annual global turnover, and up to 20% in the case of repeated infringement. Although the Commission is the sole and exclusive enforcer of the regulation, it does so in close cooperation with national competition authorities. Member States can also empower their national competition authorities to launch investigations into possible infringements. Although the DMA has already entered into force, it is applicable only from 2 May 2023.

The DSA is horizontal legislation setting out responsibilities for all the actors involved in the digital sphere. Stricter requirements have been included for very large online platforms, those with more than 45 million users in the EU, deemed to pose a systemic risk to society. Facebook and Instagram will have to publish how many users are active on their platforms by 17 February 2023. The EU executive will be the primary enforcer on large online platforms. In contrast, smaller actors will be under the competence of the Digital Services Coordinator, that will also coordinate with other national competent authorities. The designated platforms will have to comply with the regulation earlier than the other economic actors, namely until July 2024. An essential part of this compliance is to put in place a risk management system to identify and mitigate potential risks for society, like harmful content.