In a world where digital services have become as essential as electricity, the European Union is stepping up its commitment to ensuring a safer and fairer digital space. The Digital Services Act (DSA) and the Digital Markets Act (DMA) are the EU’s latest weapons in its arsenal to regulate the digital economy.
The DSA and DMA are a set of rules that apply across the EU with two main objectives: to protect the fundamental rights of all users of digital services and to promote innovation, growth and competitiveness in the European single market and global level. These rules mainly concern online intermediaries and platforms, including online marketplaces, social networks, content sharing platforms, app stores and online travel and accommodation platforms.
The DMA, in particular, is designed to keep a lid on “gatekeeper” online platforms. These are digital platforms that play a systemic role in the internal market, acting as bottlenecks between businesses and consumers for important digital services. The DMA provides specific rules for very large online platforms and search engines, those with more than 45 million users per month in the EU.
The EU’s strengthening of digital control has already started to make waves. Booking Holdings, the US company that owns Booking.com and several other travel websites, has been added to the list of EU companies under strict digital scrutiny. The European Commission has classified Booking Holdings as an online gatekeeper and its hotel booking site, Booking.com, has been classified as a “core platform service” under the DMA.
Margrethe Vestager, executive vice-president of the European Commission, said the decision means holidaymakers “will start benefiting from more choice and hotels will have more business opportunities.”. Booking Holdings responded by saying it “been working with the European Commission for some time as we anticipated today’s decision. We are reviewing their designation decision now and will continue to work constructively with them as we develop solutions to comply”
The DMA has also had a global impact on Big Tech. In March 2022, the European Parliament approved the DMA to limit the power of big tech companies in the digital economy, known as “gatekeepers”. These include Alphabet, Amazon, Apple, Byte Dance, Meta and Microsoft. The DMA aims to ensure “contestable and fair markets” and make them safer for users in digital markets.
The DMA’s advertising provisions aim to create a more competitive environment between gatekeepers and their commercial users. The use of artificial intelligence (AI) in advertising is beneficial in terms of efficiency and targeting. However, the use of artificial intelligence is a “double-edged sword”, where there is a risk of entrenching the market power of platforms that can effectively exploit certain technologies.