On December 15, 2020, the European Commission published the proposal for the Digital Services Act (DSA) and the Digital Markets Act (DMA). Since then, member states have reviewed and discussed the proposals. In this blog, an update on the progress of this Digital Services Package.
Member states have assessed and discussed the proposals. The Netherlands publishes its positions on new EU proposals in so-called BNC (Assessment of New Commission Proposals) fiches. A BNC fiche consists of a brief summary of the proposal, the possible consequences for the Netherlands and the government's position. Read the BNC fact sheet on the DSA and DMA here and here.
In April, the European Economic and Social Committee issued an opinion (see here the opinion for the DSA and here that for the DMA). In addition, a good number of discussions were held in working groups, which the Portuguese Presidency has now incorporated into two Progress Reports.
In both the Digital Services Act and Digital Markets Act Progress Report, there is generally broad support among member states for the proposals. In particular with regard to the level of ambition, the overall objectives and the need for rapid adoption.
While the reports indicate an expectation of an early agreement among member states, the presidency does identify a number of issues that still need attention.
Among other things, the report shows that a majority of member states are positive about maintaining the main principles of the E-Commerce Directive, including the limited liability of intermediaries. Against that background, the Presidency mentions the discussion around effective enforcement of the regulation and cooperation between relevant authorities. There is also broad support for moderation of online content. After all - Member States acknowledge - this can prevent negative consequences for fundamental rights.
In its report, the Presidency identifies three main topics as the most sensitive political and legal issues: enforcement and enforceability, content moderation, and scope and objectives. I discuss some relevant concerns below.
An important issue regarding the scope of the proposal is the concept of "illegal content. The scope of the proposal is limited to intermediaries. After all, it is these companies that enable the distribution of illegal content. They therefore have a responsibility to combat the distribution of illegal content. However, there is still some discussion about the definition of this illegal content. For example, member states are not yet agreed on whether content that is part of illegal activity - but is not itself illegal, such as phishing emails - should also fall under that definition. The Netherlands, for example, argues for a broader interpretation. In addition, some member states want clarification as to whether the term includes other unlawful expressions and acts.
Furthermore, the report pays attention to micro and small enterprises, among other things. To avoid disproportionate burdens, these enterprises are exempted from a number of obligations (Articles 13 and 16 DSA). However, this exemption is not intended to undermine the objectives of the proposal. For example, as illegal content and activities shift to smaller providers. Some member states therefore advocate a risk-based approach. Also, some member states ask that the definition of this category be adjusted to the digital environment so that it is no longer based solely on the size and turnover of these companies.
The clause in Article 6 of the proposal gives intermediaries more leeway to do something about illegal content without putting themselves at direct risk. Under the current regime, it is not wise for online intermediaries to remove or moderate information. This may in fact lead to knowledge of the unlawful nature of information, and thus liability of intermediary. Some question whether this clause provides sufficient incentive to take responsibility for countering the dissemination of criminal and unlawful content through their services.
Read
here
the full Digital Services Act Progress Report
The Digital Markets Act Progress Report also shows broad support. In doing so, member states recognize the need to strike a fair balance between fast and flexible procedures on the one hand, and the legal certainty of the measures on the other. Furthermore, the vast majority of member states support the combination of quantitative and qualitative thresholds to designate gatekeepers. Finally, the importance of effective investigative tools and sanctions is also recognized.
In this report, the Presidency also refers to a number of political and legal concerns. What draws particular attention here is the role of member states in DMA enforcement, mergers and acquisitions, and gatekeeper obligations and designation.
A majority of member states want to increase their role - especially that of competent national authorities. While recognizing that the Commission should play a central role in enforcement, member states want more weight in terms of market research, market monitoring and decision-making procedures.
Other interesting point raised is Article 12 of the proposal. This requires gatekeepers to inform the Commission of any proposed acquisition of other digital service providers. In this regard, several member states are pushing for stricter merger control. This includes the Netherlands, which has submitted a non-paper published with Germany and France. In that joint proposal, the countries advocate that all mergers and acquisitions by large digital platforms with a gatekeeper position can be reviewed by an EU regulator.
In general, member states support the core principles of the mechanism to designate gatekeepers (Art. 3, 4 and 15 DMA). However, some of the member states do suggest changes with respect to this designation procedure. For example, emphasizing that conglomeration strategies should be taken into account as a relevant part of the assessment to designate gatekeepers. According to the Netherlands, the position a platform acquires by combining different services should also be taken into account. Precisely combining these services strengthens the power of a platform, the Cabinet argues.
Although Member States fully support clearly defined and enforceable obligations (Art. 5 and 6 DMA), some of them insist on adjustments to the scope and conditions of these obligations. These include, in particular, obligations on interoperability, data portability and data access. Some member states have also advocated a more tailored approach to the imposition of these obligations. Indeed, this would allow better consideration of the different business models of gatekeepers.
Read
here
the full Digital Markets Act Progress Report
Reports such as these are prepared with the aim of informing the European Parliament and the public of the Council's progress on the issue. Reports also identify themes on which there is agreement or, on the contrary, discussion among member states. Finally, a progress report allows the incoming Presidency - in this case Slovenia - to determine the next steps for further consideration of the proposal.
The Presidency of the Council of the European Union rotates and is alternately chaired by a member state every six months. Now it is Portugal and, from July, Slovenia. This Presidency plays an essential role in guiding the legislative and political decision-making process. France, which takes over the Presidency from Slovenia in the first half of 2022, has already expressed its desire to complete the negotiations during its term. Whether that is feasible will remain to be seen.
