New legislation brings order to digital markets

Laura Halenius

Brussels (Brussels Morning) The European Commission submitted new legislative proposals in December 2020 that aim for fairer digital practices and services for businesses and consumers. 

The proposals are based on European values: human rights, personal freedom, data protection, liberty, democracy, equality and the rule of law. While the legislation can lay a solid foundation for ensuring these values, successful implementation will require substantial efforts.

With the new legislation, the Commission hopes to ensure that consumers gain access to a wide selection of safe products and services. In other words, what is currently illegal outside the internet, such as stolen goods, will also be illegal online.

I would also secure a free and level playing field for European businesses when competing in digital markets, just as it does in conventional markets, prescribing illegal content can be removed from services.

The regulation of the digital markets is value-based

The purpose of the Digital Markets Act is to prevent tech giants from abusing their position as the gatekeepers of the single market. Best-known among these are Google, Amazon, Facebook and Apple, whose market dominance is so formidable currently that, according to a Commission risk analysis, they could potentially stop or at least significantly delay business users and their competitors from offering their services to consumers.

A typical example of wielding power over competitors is the battle that flared up between Apple and Epic Games last year. Epic Games added an option in its popular Fortnite game that allowed players to make in-app purchases without using Apple’s App Store. 

The reason for so doing was Apple’s policy of taking a 30% cut of each in-app purchase, which Epic Games considered unreasonable. Apple retaliated by banning Fortnite completely from its App Store. The new regulation seeks to eliminate such abuses of their dominant market positions by tech giants to support the growth of small tech companies, small and medium enterprises and start-ups.

On the other hand, the legislative proposal for the Digital Services Act aims to shift significantly more responsibility onto tech giants like Facebook and Amazon for content marketed and sold on their platforms. 

Accordingly, in future, digital services offering products, services or content to consumers should be subject to binding EU regulations in which the rights and responsibilities of platform users, tech companies, and authorities are clearly defined and apportioned.  

Tech companies would also be obliged to disclose how they use algorithms to select content for individual users. These changes would give researchers access to more extensive data and, with that, better opportunities to evaluate the ethical conduct of tech companies.

Digitisation akin to the advent of traffic lights 150 years ago

The timing of the new legislative proposals could not be more opportune given that the global pandemic has opened the floodgates of a digital transition involving every European. Online retail sales have exploded, video and audio meetings have become a primary channel of communication in business, friends and families have learned to rely on social media to keep in touch and transactions with authorities are taking place online whenever possible.

In December 2020, Margrethe Vestager, European Commission executive vice-president for a Europe fit for the digital age, compared the new proposals to the introduction of traffic lights 150 years ago, when automobiles began to replace horse-drawn carriages.

The analogy between digital services and traffic is apt. Today, data is the pulse of our society and best serves that vital purpose free of monopolisation and without algorithm-based systems that create discriminatory practices and inequality.

Digital responsibility key to maintaining citizen-user trust  

There is still a long way to go from legislative proposals to implementation, and chances are the companies affected by the proposals will continue to lobby forcefully against them. There are, however, positive signs that suggest the digital landscape will look different in the future.

Legislation speeds up development, but it can only serve as a signpost and necessarily leaves plenty of practical questions unanswered. In fact, companies and the government should embrace digital responsibility even more extensively than the laws require to maintain the trust of citizens and customers. Building trust is a long process but destroying it takes seconds. 

Trust is the fuel that keeps data moving in digital society and spurs the emergence of new digital services to make our day-to-day lives easier. The current framework of digital responsibility must be expanded and it will take completely new tools and reporting practices to make sure we don’t lose the all-important trust of the people.

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Brussels Morning is a daily online newspaper based in Belgium. BM publishes unique and independent coverage on international and European affairs. With a Europe-wide perspective, BM covers policies and politics of the EU, significant Member State developments, and looks at the international agenda with a European perspective.
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Laura Halenius works as a Senior Lead at Sitra, the Finnish Innovation Fund. In charge of EU relations, she focuses on collaborating with various stakeholders towards a human-driven European data economy.