Several years in the making, the EU’s two sweeping Big Tech laws — the Digital Markets Act and the Digital Services Act — have entered into full force. The new regulatory regime forces the world’s biggest tech companies to take greater responsibility for preventing the publication of illegal content and offers consumers more control over their data.
Designed to create a safer and more competitive digital environment for users and technology companies, the Digital Services Act (DSA) and the Digital Markets Act (DMA) were agreed in principle by the European Commission (EC) two years ago, and entered into force on February 17, and March 6, 2024, respectively.
Together, the Digital Services Act and the Digital Markets Act give EU regulators sweeping oversight powers of Big Tech companies, forcing them to create a safer online environment while also offering users greater choice in how their data is collected and manipulated.
The Digital Markets Act also aims to curb the marketplace dominance of established tech players, and level the playing field for new entrants.
Under the laws, tech companies found in breach of the DMA could be fined up to 10% of their global revenue, rising to 20% for repeat offenders. Those found in breach of the DSA could be fined 6% of their total revenue.
Under the Digital Markets Act, the EC has designated six tech companies operating 22 digital platforms and services — Alphabet (Google, YouTube), Amazon, ByteDance (TikTok), Apple, Meta (Facebook, Instagram, Messenger) and Microsoft — as ‘gatekeepers’.
In practice, gatekeeper companies must now ask users for consent to use their data for advertising. They will also be forced to allow third party service providers to operate within their own platforms, allow users to uninstall pre-installed software or apps, and offer users access to their data.
European citizens have already begun to see the impact of the law: Meta apps are offering users the choice of whether their data is shared between its different platforms. Meta users can also access ad-free versions of Instagram and Facebook by purchasing an ad-free subscription service.
iPhone owners will now be able to purchase apps from outside the App Store, while Google can no longer preference its own services in search results.
Messaging services such as WhatsApp, Messenger or iMessage will also be forced to enable users to message each other from each other’s services, similar to telephone text messaging.
In early signs that it means business, the EC launched a formal investigation into TikTok under the DSA just two days after the law entered into force.
The investigation is focused on whether the platform does enough to protect minors from the impact of harmful content. It will examine areas including advertising transparency, data access for researchers and risk management of harmful content.
Significantly, the investigation will also focus on TikTok’s compliance under the DSA with obligations in relation to the negative effects of the algorithm, which could simulate behavioral addictions and so-called ‘rabbit-hole’ effects.
The EC launched a similar investigation into X late last year, and focused on dissemination of illegal content on the platform.
The Digital Markets Act prohibits tech companies from combining data from different platforms and services for the purpose of targeted advertising, effectively diluting the power of social media advertising.
Forcing advertisers to be less dependent on data and personal profiling to generate results may lead them to find new ways of reaching audiences.
As advertisers seek to ensure compliance with the DMA, it is reasonable to expect some will direct more investment to influencer marketing, with its emphasis on creating authentic and personal links with audiences.
The Digital Services Act, with its focus on creating a safer online environment for users, will place greater responsibility on influencers and brands for ensuring that online content is appropriate, legal, and not misleading.
Under the DSA, influencers uploading commercial content must clearly label the content as commercial, while those identified as ‘traders’ need to ensure traceability of services or products promoted on social media platforms.
The DSA creates a link between its provisions and other national or European regulations governing online content. For brands and influencers monetizing content, it sets out a new definition of illegal content.
Under the DSA, illegal content “is any information or activity, including the sale of products or provision of services which is not in compliance with Union law or the law of a Member State, irrespective of the precise subject matter or nature of that law”.
This means that failure to comply with EU and national laws on advertising content could render influencer content illegal under the DSA and subject to its provisions and penalties.
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