The analogy between big tech and the Wild West has been made before. The parallels between the power of the emerging railroad companies and today’s internet giants work on many levels. Still, the recent announcement by the European Commission of far-reaching proposals for the regulation of digital platforms and online intermediaries brought to mind the era of US railroad monopiles of the late 1880s as they sought to link up the former frontier wildernesses.
Allow me to elaborate….
Late 19th-century Americans loved railroads, which seemed to eradicate time and space, moving goods and people more cheaply and more conveniently than ever before (think Google and Amazon) but they also feared railroads because in most of the country it was impossible to do business without them. This power to decide economic winners and losers threatened individual businesses and the conditions that sustained established commerce. Sound familiar?
Will consumers be the beneficiaries?
Based on current proposals, the Digital Markets Act (DMA) will impose on those digital platforms designated as “gatekeepers” several obligations to curtail practices that are considered to limit competition or otherwise be unfair.
The DMA would combine the current "after the event" approach of regulating digital platforms with gatekeepers' characteristics and a dynamic market investigation framework to examine digital markets prone to market failures in advance. Consumers will be the final beneficiaries of fairer and more contestable digital market, including lower prices, better and new services and greater choice.
The DMA has a distinct competition law feel to it; many of its core proposals will be familiar to competition lawyers. However, the Digital Services Act (DSA) will aim to define new and enhanced responsibilities and reinforce online intermediaries and platforms' accountability. It will do this by ensuring that consumers are protected as effectively against illegal products, content and activities on online platforms as they are offline.
Will the proposal make it to legislation?
The DSA proposals include such things as:
- the requirement for intermediary services to have an EU point of contact
- cloud service providers to allow third parties to notify them of illegal content contained on their sites (and to act on such notifications)
- a mechanism for challenging decisions taken by tech companies to restrict access to a service or account
- for large online platforms (45m+ monthly active users) the obligation to mitigate systemic risks, subject themselves to external audits, appoint compliance officers and publish performance reports.
Time will tell if everything in the EU's proposals makes it into legislation. As was noted at a recent Clifford Chance European Perspectives Tech Series webinar, a clear direction of travel is apparent. The DSA is all about streamlining reporting and establishing a system of oversight.
So if the DMA is the Anti-Monopolists coming in to break up the America Railroad giants, then the DSA could be the Sheriff of old Western movies, riding into town with nothing but a badge (regulations) and a gun (fines) ready to clean up!
Watch this space. There may be a new sheriff in town.