What role will national regulators play in the future?

The EU Commission has made far-reaching proposals to give digital corporations – and themselves more power. A guest post.

Margrethe Vestager, the Commissioner responsible for Digital, and Internal Market Commissioner Thierry Breton, will explain the new regulatory steps to the press on December 15, 2020 in Brussels.

KShortly before Christmas, the EU Commission published the “Digital Markets Act” (DMA) and the “Digital Services Act” (DSA), two legislative proposals designed to regulate the Internet differently. The DMA subjects providers of brokerage services, search engines, social networks, media services, messaging and cloud services that are independent of phone numbers, as well as operating systems for networkable devices, to certain rules and prohibitions when dealing with commercial users.

The obligations should predominantly only apply to digital gatekeepers. Who counts is clearly defined: Operators of online platforms that generate annual sales of more than 6.5 billion euros or have a capital market value of at least 65 billion euros. You must also be active in at least three EU countries, have more than 45 million active private end users per month and more than 10,000 active business users in the last financial year. In practice, the DMA aims to avoid self-favors and denials of access, especially from Google, Apple, Facebook and Amazon as well as Airbnb, Booking.com, Ebay, Microsoft and Uber.

With the DSA, the commission addresses providers of digital intermediation services in general and of larger online platforms for sharing user-generated content with at least 50 employees and annual sales of more than 10 million euros. Very large online platforms (“SGOP”) with at least 45 million active users per month, the majority of whom are likely to be the same companies that are considered gatekeepers under the DMA, will be more strictly regulated.

Vague exception criteria

The package of DMA and DSA is an overdue EU project to contain the digital corporations. So far, however, the main debate has focused on the extent to which the proposals are sufficient to limit competitive advantages, secure diversity of opinion and at the same time curb hate speech, manipulation and disinformation. The role that national authorities should still play in the regulation of gatekeepers and SGOP is hardly discussed.

The DMA stipulates that the EU Commission monitors whether gatekeepers comply with the requirements. It is also given the authority to suspend duties at the request of a gatekeeper if they threaten the gatekeeper’s ability to survive or if a waiver of requirements is indicated due to overriding public interest.

The vague exception criteria open up great scope for decision-making and give the Commission enormous power to implement its own political ideas. It only has to take into account as far as possible the opinion of a committee to which each Member State sends a representative.

Supervise consistently

According to the DSA, in turn, each EU member must designate at least one authority which, as the coordinator for digital services, is responsible for the national enforcement of the law insofar as it does not concern SGOP. For the latter, the Commission reserves the right to decide on urgent countermeasures and fines after a formal determination of an infringement by an SGOP.

While preparing the decision, it has to seek advice from a European committee for digital services, to which each EU member sends the national coordinator for digital services. However, it does not even have to give reasons if it does not follow committee recommendations.

An indication that the Commission is planning to act largely alone is that it calls for the establishment of a total of 87 full-time positions and, in addition, external resources to the extent of 43 full-time positions in the budget planning for the application of the two sets of rules.