Dear Readers,
This edition of the Chronicle examines upcoming changes in EU platform regulation. Specifically, it focuses on the EU Digital Services Act (“DSA”) from a competition perspective. The DSA is perhaps little understood compared to its companion regulation: the Digital Markets Act (“DMA”), which explicitly aims to increase the contestability of digital markets. But the DSA, particularly via its modification of liability rules for platforms, will also have competitive effects on digital platforms.
The DSA sets itself the laudable aim of ensuring a “safe, predictable and trusted online environment” by targeting various forms of harmful behaviors online, including the spread of illegal and harmful content, such as disinformation. Indeed, the DSA is remarkable in its ambition, as noted by Michèle Ledger & Laura Sboarina. The DSA explicitly seeks to make the internet a “safer place,” while also seeking to protect fundamental rights and enhance consumer protection. This new regulatory framework places important responsibilities on intermediary services, depending on their reach and size relating to the moderation of content. Julia Apostle, Kelly Hagedorn, Christian Schroder & Adele Harrison further detail the obligations imposed by the DSA. Despite the DSA coming into force in February 2023, many businesses do not know yet that are subject to the DSA. The authors provide an overview of the DSA, including its scope of application, key obligations, when they take effect, and sanctions for violations.
It also covers other aspects of digital services, such as exploitative online advertising and “dark patterns,” including manipulative and coercive user interface designs. That said, the DSA does not address the moderation of media services (but this is now covered in the Commission’s proposed European Media Freedom Act). The authors query whether the DSA will deliver on its promise, or whether it is too ambitious.
Turning to more concrete aspects of the changes to the rules governing platforms, Maciej Sobolewski & Néstor Duch-Brown argue that the DSA, via the modification of liability rules for platforms, could also bring about competitive effects in the platform economy. The authors, after setting out the case for reform, conjecture as to how platforms might adapt to the new rules. Finally, they hypothesize as to how the DSA might affect competition between large and small platforms via changes in content curation behavior.
Delving further into the detail, Katie Pentney explores the particular due diligence obligations the DSA places on large online platforms, like Facebook and Twitter, to achieve its ends. As the author notes, the vagueness of the provisions, the deference afforded to these platforms, and the disjointed approach to harmful content such as disinformation may hamper the DSA’s ability to fulfil its promise. This article sets out the key provisions of the heightened due diligence framework, the underlying compromises made during the negotiations, and the lingering challenges that lie ahead.
Taking yet a further deep cut, Oliver Budzinski & Madlen Karg discuss how the DSA will interact with algorithmic search and recommender systems. Such systems have the key function of pre-sorting the torrent of online information for users’ benefit. However, they also harbor the risk of competitive distortions and, perhaps more controversially, alleged ideological bias.
The DSA responds to this concern primarily through the imposition of transparency obligations, which the authors analyze from a law and economics perspective. Contrary to the DSA’s vaunted aims, the authors conclude that the proposed approach neither prevents possible distortions of competition nor ideological media bias. Therefore, according to the authors, there is a risk that the DSA´s transparency requirements will become a paper tiger.
These debates will no doubt continue to rage as the DSA is implemented (along with the DMA, its partner regulation). At this formative time in the development of online media regulation, the pieces in this Chronicle set the stage for the controversies to come, with a particular focus on their potential effects on competition.
As always, many thanks to our great panel of authors.
Sincerely,
CPI Team
