EU Rewrites Rules for E-Commerce

Digital Services Act set to overhaul the digital landscape

This month, the European Commission is expected to announce regulation that could significantly change the digital landscape within the EU. Companies doing business within the region must prepare for these changes.

The Digital Services Act is a legislative package proposed by the commission to modernize the legal framework for online services, which has to date been built on the EU’s 20-year-old e-commerce directive. It has been drafted as part of the commission’s 2020 Work Programme, which highlights its most important initiatives for the year. The new set of rules is intended to pave the way for a more harmonized digital EU market and make Europe a global leader for rules governing online content moderation.

According to the European Parliament, the Digital Services Act “aims to shape the digital economy at the EU level as well as setting the standards for the rest of the world”.

Specifically, the regulation is expected to overhaul the management of content on platforms such as Facebook and Google. The EU intends to make big tech players more responsible for the content shared on their platforms, and to ensure that competitors have a fair chance to succeed against them. The act will cover two main pillars, the first regulating the responsibilities and liabilities of online service providers when it comes to illegal and harmful content, and the second proposing more regulation of large online platforms, the so-called gatekeepers, which consumers have “come to rely on”.

Last week, the European Commission also proposed the Data Governance Act, a framework to make data sharing easier in the EU. This includes measures to increase trust in data sharing, rules on neutrality and practices to give Europeans more control over how their data is used.

Policymakers in the EU, which is already home to the world’s strictest data privacy laws, believe Europe is in a position to set new standards for the regulation of online services not just for Europe but worldwide. The upcoming rules represent a significant strike against the seemingly limitless power of big tech, although it’s unclear how the Digital Services Act will fit with the existing General Data Protection Regulation.

Major technology companies are increasingly facing regulatory friction, not just in the EU but also in the US both at the federal and state levels, where antitrust authorities are looking at filing lawsuits against them.

We can expect that the affected tech companies will put up a fight before the laws are enacted, highlighting the potential negative impacts that the rules will have on innovation and the overall economy. The legislative approval process, of course, is likely to be lengthy, as the proposals will have to be signed off by member states and the European Parliament.