I-
INTRODUCTION
Developments in science and technology have led to the
proliferation of digital platforms all over the world. With the increasing
number of users benefiting from digital services, ensuring the security of
users, controlling the market power of players in digital markets, and
providing a legal basis for competition between actors gain great importance.
With the acceleration of digitalization, the local
competition law legislation of countries is not sufficient, and it is deemed
necessary to provide a single digital market (Digital Single Market) for
technology companies to operate in accordance with the law. Another reason for
the single digital market is to ensure the protection of consumers who benefit
from the services provided by digital actors.
Accordingly, two regulations that will shape Europe's
digital future have recently entered into force. These are the Digital Services
Act (DSA), which was published in the Official Journal of the European Union on
27.10.2022 and entered into force on 16.11.2022, and the Digital Markets Act
(DMA), which was entered into on 01.11.2022 and started to be implemented on
02.05.2023. In this study, the objectives of these two new regulations will be
explained to both users and digital market actors, and the importance of
harmonization with these laws will be explained in the upcoming period.
II-
PURPOSE OF THE DIGITAL SERVICES ACT AND THE DIGITAL MARKETS ACT
The European Union acts as a pioneering regulator in
many areas, promulgating various laws, regulations and establishing authorities
on a wide range of issues, with the aim of introducing a single regulation
governing the global economy and markets. The European Union has demonstrated
its regulatory leadership through the General Data Protection Regulation
(GDPR), the Markets in Crypto Assets Regulation (MiCA), the European Supply
Chain Code (ESC), the European Union Market Surveillance Regulation (MSR), the
Corporate Sustainability Reporting Directive (CSRD) and the European Banking
Authority (EBA), European Insurance and Occupational Pensions Authority
(EIOPA), European Securities and Markets Authority (ESMA), European Food Safety
Authority (EFSA), Anti-Money Laundering Authority (AMLA) (The legislative
proposal was made on July 20, 2021 and this authority is not yet active. ) by
establishing authorities such as the Digital Services Act and the Digital
Markets Act. [1] The Digital Services Act and the Digital Markets Act were
enacted to ensure a digital order in line with European values and to enable
digital actors to operate within a certain framework.
These two laws aim to ensure that the digital market
is fair, transparent, and contestable, to create a safer digital space where
users' fundamental rights are protected, and to create a level playing field
for businesses. [2] While it is necessary for local authorities to regulate at
the national level, the European Commission, concerned that this would create
confusion and disparities in practice across Europe, has approved and enacted
these two legislations.
III-
DIGITAL SERVICES ACT (DSA)
3.1. What
awaits companies under the Digital Services Act?
Published on October 27, 2022 in the Official Journal
of the European Union and entered into force on November 16, 2022, the Digital
Services Act will have an impact on online intermediaries and platforms such as
online marketplaces, social networks, content sharing platforms, app stores,
online travel and accommodation platforms. On the one hand, the Digital
Services Act will change the rules in the European Union's existing e-commerce
directive, and on the other hand, it will introduce new regulations for digital
platforms.
It is important to note that the Act balances the
responsibilities in the online ecosystem according to the size of the players
in this ecosystem and strikes a reasonable balance between the cost of
compliance and the size of the platform that will be under obligation. [3]
The Digital Services Act imposes new obligations on
market players, which would contradict the purpose of the Law, given that the Act
aims to ensure a competitive and fair digital market order. Companies are
expected to report on illegal content on their platforms or dangerous
third-party content and products. With the Digital Services Act, online
platforms will be required to publish the number of active users by February
17, 2023. If the platform has more than 45 million monthly users, which is 10%
of the European population, the platform will be qualified by the Commission as
a major online platform-online search engine and will be expected to comply
with the Digital Services Act within 4 months. Platforms subject to the Digital
Services Act will first be required to provide the Commission with a risk
assessment for the first year. [4]
It is important to note that the Digital Services Act
will not only affect online platforms and online marketplaces established in
the European Union. Organizations that are not established in the European
Union but provide services in countries within the European Union are also
expected to comply with the Act. In this context, many companies not
established in the European Union will be obliged to appoint a legal
representative and will benefit from common rules when providing services in
the European Union.
With the Digital Service Act, companies that advertise
on online platforms will be obliged to transparently disclose to the user that the
content presented to the user is an advertisement, for whom the advertisement
is displayed, and the parameters used to determine which user the advertisement
will be displayed to. Additional obligations have been introduced for very
large online platforms, which will be required to provide information to users
on the price of the advertisement and the fee paid to the publisher, and to
compile information on the advertisement in a public repository.
Online marketplaces will be expected to retain
information on sellers who conclude distance sales contracts with users through
their platforms under the "know your business customer" principle.
Intermediary service providers will be required to publish an open, transparent
and detailed report on the content moderation conducted annually under the Act.
The Act requires online platforms providing hosting services to establish a
complaint mechanism.
With these mechanisms, user complaints will be
resolved quickly and the fight against illegal content and counterfeit products
will be more effective. The above-mentioned obligations will not be sufficient
to explain all of the obligations introduced under the Digital Services Act. In
this study, we have outlined the general framework of the obligations that come
with the Act, and the obligations to which each platform will be subject will
only be revealed after a detailed analysis of the Act in question.
In the event of a breach of the Digital Services Act,
depending on the nature, size and repetition of the breach, the offending
undertaking may face a fine of up to 6% of its annual turnover. Accordingly, it
would be best for each undertaking/company to identify its obligations under
this legislation determine how to comply with these obligations and take action
accordingly.
3.2. What
the Digital Services Act Brings to Users?
As mentioned at
the beginning of the study, the proliferation of digital platforms and the
increased likelihood of users facing many negative situations through these
platforms make it difficult to ensure users' online security. Accordingly, in
order to ensure the digital security of users, it has become a necessity to
regulate this emerging area in accordance with the changing conditions.
The amendments introduced under the Digital Services
Act will ensure that users have a safer experience on online platforms, that
companies/entrepreneurs inform users to the maximum extent possible and that a
transparent digital environment is ensured. In particular, it will be ensured
that the user's preference is prioritized in the delivery of information
content and advertisements offered by very large online platforms and the
presence of content that will manipulate the user will be reduced.
If users encounter illegal content, there will be
mechanisms for them to report it, and if their content is removed from digital
platforms, they will have the right to appeal against the decision made by
online platforms. Subjecting all but a very small number of platforms to the
obligations set out in the Digital Services Act will facilitate a safe digital
environment and reduce the likelihood of users being exposed to manipulative
and illegal content.
IV-
DIGITAL MARKETS ACT (DMA)
The European Union Digital Markets Act, which entered
into force on November 1, 2022 and will be implemented on May 2, 2023, aims to
put an end to the unfair practices of companies (such as Google, Amazon, Apple)
that act as gatekeepers in the online platform economy. In addition, the Digital
Markets Act regulates the circumstances in which online platforms will be
considered gatekeepers and sets out a number of new obligations to be imposed
on them. [5] While the Digital Services Act concerns a wide range of
undertakings, from large-scale platforms to small-scale platforms, the Digital
Markets Act is more relevant to large technology firms in Silicon Valley than
to small-scale platforms.
The ability of platforms to access and process and
enrich the personal data of many users has led some platforms to take control
of the digital market. This prevents new actors from entering the market and
makes digital markets less competitive and fair. The Digital Markets Act
concerns gatekeepers that provide "core platform services". The law
defines gatekeepers, imposes certain obligations on them and prohibits them
from engaging in certain activities.
The first step is to define the scope of "main
platform services" and to determine which companies within this scope will
be considered as "gatekeepers". Main platform services can be defined
as (i) online brokerage services, (ii) online search engines (iii) online
social networking services (iv) video sharing platform services (v) unnumbered
communication services (vi) operating systems (vii) cloud computing services
and advertising services offered in connection with these services.
Which companies offering these platform services will
be considered as gatekeepers will be determined in line with the regulation in
the Law. For a company to qualify as a gatekeeper
- European turnover of €7.5 billion or more in the
last three financial years, or an average market capitalization of €75 billion
or more in the last financial year, and provides main platform services in at
least three EU Member States,
- Providing a main platform service with more than 45
million monthly active end users based in the EU and more than 10,000 annual
active business users based in the EU in the last financial year,
- The thresholds in the first two points must have
been met in the last three financial years.
If a platform determines that it is a gatekeeper, it
must notify the Commission. Even if the platform fails to do so, the Commission
may make this determination ex officio.
In conjunction with the Digital Markets Act;
- Gatekeepers will not be able to combine the personal
data it obtains within the scope of its main platform services with personal
data obtained from other services it offers or third-party services.
- Gatekeepers will not be able to prioritize its own
product or service over third parties. - Gatekeepers will not be able to
require app developers to use their own payment or identification systems to
appear in their store.
- Gatekeepers shall not use non-public data about
business users to compete with them. The above-mentioned prohibited activities
are the prominent prohibitions introduced by the Law, and all prohibited
activities will become apparent upon a detailed review of the Digital Markets
Law. If the platforms subject to the prohibition do not comply with these
prohibitions, the penalty increases from 6% of annual turnover to 10% as
stipulated in the Digital Services Act. Some of the obligations foreseen for
gatekeepers are as follows:
- Enabling end-users to unsubscribe from services
offered by gatekeepers as easily as they subscribe,
- Allowing app developers fair access to the
complementary functionalities of smartphones,
- Granting access to marketing or advertising
performance data to companies that advertise on their platforms,
- Business users are allowed to present/promote their
offers and enter into contracts with customers outside the gatekeeper. [6]
All of these prohibitions and obligations are
prominent prohibitions and obligations in the Digital Markets Act, and
platforms subject to the Law should evaluate all prohibitions and obligations
regulated under the Law in terms of their platforms and comply with the Law in
this context in order to avoid any sanctions.
V-
CONCLUSION
As digital platforms play an important role in every
aspect of our lives, the control of digital markets is becoming increasingly
important. Ensuring the control of digital platforms is extremely important
both in terms of ensuring that the actors playing a role in this digital market
operate in a competitive and fair environment, preventing the difficulties
faced by new actors entering the market, and providing services to users in a
secure digital environment.
The regulatory aspect of the European Union has also
manifested itself in terms of digital markets and services and the Digital
Services Act (DSA) and the Digital Markets Act (DMA) have come into force.
While the Digital Services Act concerns many online platforms large and small,
the Digital Markets Act is more relevant to technology companies that provide
main platform services on a large scale and are called gatekeepers. To avoid
any sanctions, it is important for companies to identify the prohibitions and
obligations stipulated by the regulations that would affect them and to
initiate the compliance process without delay in order to comply with these
regulations in this direction.
Att. Gülşah Işık
References:
1. Republic
of Türkiye Ministry of EU, Avrupa Birliğinde Yeni Denetleyici
Otoriteler, November 2011, Ankara
2. https://commission.europa.eu/, Policies,
The Digital Services Act package
3. https://commission.europa.eu/,
Questions and Answers: Digital Services Act
4. https://commission.europa.eu/, Policies,
The Digital Services Act package
5. TÜSİAD Competition
Bulletin- November 2022
6. https://commission.europa.eu/,
Digital Markets Act: Ensuring fair and open digital markets
