New EU Laws Help Startups Tackle Big Tech

Author:
Ally Winning, European Editor, PSD

Date
10/01/2023

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Ally Winning, European Editor, PSD

The EU’s Digital Services Act and Digital Markets Act, two laws that aim to create a safer digital space while protecting users’ fundamental rights and establishing a level playing field for businesses, have now come into force.

In the past, the EU has made sector-specific interventions at EU level, but it also realised that there were still some significant gaps and legal issues to address. For example, some large platforms control ecosystems in the digital economy and have acted as gatekeepers in those domains. That status provides them with the power to make their own rules, which have proven detrimental for businesses using these platforms and provide consumers with less choice. The organization is also concerned about the trade of illegal goods, services and content online. Finally, online services are also being misused by manipulative algorithmic systems to amplify the spread of disinformation, and for other harmful purposes.

In particular, the domination of large multinationals in the digital space has made it harder for startups to enter the market successfully. The law is targeted at the huge companies that bundle their services with the platform, denying the same opportunities to smaller independent competitors. The new laws will attempt to make the marketplace more competitive and encourage startups to provide alternative apps that do a similar job to the ones provided by the market leaders. 

The digital services targeted by the law include many online services, from websites to internet infrastructure services and online platforms. The DSA primarily concerns online intermediaries and platforms - for example, online marketplaces, social networks, content-sharing platforms, app stores, and accommodation platforms.

As a first step in implementing the law, the EU required platforms or search engines with over 45 million users to be designated as a very large online platform or a very large online search engine. These services will have 4 months to comply with the obligations of the DSA, which includes carrying out and providing the EU Commission with an annual risk assessment. EU Member States will have to appoint Digital Services Coordinators by 17 February 2024, when platforms with less than 45 million active users will also have to comply with all the DSA rules

The Digital Markets Act includes rules that govern gatekeeper online platforms. Gatekeeper platforms are digital platforms with a systemic role in the internal market that function as bottlenecks between businesses and consumers for important digital services. Some of these services are also covered in the Digital Services Act, but for different reasons.

The first six gatekeepers designated by the EU under the DMA were, Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. 22 core platform services provided by the six gatekeepers have been designated. The gatekeepers will now have six months to ensure full compliance with the DMA obligations for each of their designated core platform services.

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