Thursday

23rd Sep 2021

Online giants could face 10% fines under new EU law

  • 'We are organising our digital space for the next decades,' said the commissioner for internal market Thierry Breton (Photo: EC - Audiovisual Service)

Big tech firms deemed online 'gatekeepers', such as Facebook, Twitter, and TikTok, could face fines of up to 10 percent of their annual revenues, under landmark EU draft legislation aimed at illegal content and unfair practices in the digital environment.

The European Commission unveiled on Tuesday (15 December) a package of proposals that set out legal obligations for digital platforms, short of actual taxation.

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The Digital Service Act (DSA) is aimed at making online companies more accountable for the illegal and harmful content displayed on their platforms, while the Digital Market Act (DMA) establishes a list of 'dos' and 'don'ts' for the biggest online platforms.

"We are organising our digital space for the next decades, with harmonised rules, ex-ante obligations, better oversight, speedy enforcement, and deterrent sanctions," said the commissioner for internal market Thierry Breton.

The DSA will introduce new transparency and accountability requirements for tech companies concerning content moderation, advertising, or automated decision-making processes.

This landmark legislation, which builds on the bloc's now two-decades old e-Commerce Directive, primarily aims to harmonise liability rules online to avoid legal fragmentation across the EU.

Under the new rules, member states will be required to appoint a so-called 'Digital Services Coordinator' responsible for the enforcement of the entire package.

However, the commission will retain powers to step in - for example, in the case of very large platforms.

'Black box' algorithms

While the proposal does not include any general obligation to monitor the content of their websites, very large platforms will have to publish annual reports on any content moderation they engaged in during that year.

These reports should clarify the amount of removal orders of illegal content and all measures taken by the providers that could affect the availability, visibility and accessibility of information, including a clear explanation about, for instance, how Facebook's algorithmic recommendation system works.

However, according to Jan Penfrat from the European Digital Rights network, "it remains to be seen whether in practice this will be sufficient for the regulator to take meaningful action against discriminatory or abusive algorithms that operate as 'black boxes' today".

Nevertheless, the commission will be entitled to order any platform to provide access to, and explanations relating to, its databases and algorithms.

Very large companies, reaching 45 million users or more, will also be required to conduct annual risk assessments of the challenges stemming from their services, including risks related to the dissemination of illegal content and any impact on fundamental human rights.

Platforms will have to inform competent authorities about measures taken to remove or disable access to illegal content, such as hate speech or child abuse, but also the users whose content has been removed or blocked.

They will also have to create a channel for users to effectively report illegal content.

All platforms, except the smallest, will be required to provide users with the access of an internal complaint-handling system that allows them to lodge complaints about order removals electronically and free of charge.

The 'gatekeepers'

The DMA rules will apply only to all big firms deemed to be 'gatekeepers' in terms of turnover and active users, independently of where they are established. Google, Facebook or Amazon, among others, are expected to get this label.

The new rules will ban digital gatekeepers from unfair practices such as 'self-preferencing' - the use of the data of their users for their own benefit or locking users into their platform.

Amazon is currently the subject of two antitrust investigations into the possible preferential treatment of their own retail offers, while Apple is being investigated for raising barriers to rivals' applications in its app store.

Under the new rules, the commission will have the power to carry out a market investigation to identify gatekeepers or to issue additional remedies if a gatekeeper systematically infringed the rules.

"This is to complement vigilant competition law enforcement [and] to do the same thing that we have been doing in telecom, banking or energy," said EU digital commissioner, Margrethe Vestager.

The package of proposals now has to be discussed by member states and MEPs, both of whom are expected to face intense lobbying during the next years, before the new rules come into force.

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