10% of profits as a fine? New legislation under discussion in the EU

On December 15, 2020, the European Commission proposed a new bill to curb the power of technology enterprises. The Digital Services Act (DSA) and the Digital Markets Act (DMA) impose fines up to 10% of revenues for companies that do not follow the rules.

Research continues in Europe and the United States as to the market monopoly of technology giants represented by GAFA (Google, Apple, Facebook, Amazon). But the new proposal aims to curb this corporate influence and bring back competition in the marketplace.

First, DSA demands that the online brokerage quickly remove illegal content and disclose it to users with transparency. In addition, DMA aims to ensure that companies that are gatekeepers take the same anti-competitive action first.

An EU commissioner said the legislation aims to achieve one purpose, in other words, it gives our users a variety of choices about safe products or online services.

The difference between the two laws is the scope of application. DMA is geared towards gatekeepers, while DSA on the other hand is for a wider range of online brokerage services. According to the EU, online brokerage services include services that provide network infrastructure, cloud services, and small online platforms.

DSA aims to improve the mechanism for deleting illegal content, and the service it provides has different requirements imposed on the company. Because of this, the obligations imposed on cloud companies are less than those imposed on social media. In addition, businesses should provide transparency to users about the types and reasons of content to be removed, and establish a way for users to challenge moderation. And if companies violate the law, they are fined up to 6% of global revenue.

Meanwhile, the number of DMA target companies is limited. The EU does not mention the name of the gatekeeper, but it has sales of more than 6.5 billion euros or more than 45 million users in Europe. It is said that it is a company that has established its position in the market, so it can be considered as a GAFA. Gatekeepers are obligated to strengthen regulatory oversight and not interfere with small business competition. Companies that do not comply with DMA will be fined up to 10% of global revenue.

Until now, it has been repeatedly pointed out that Google and Amazon are prioritizing their products, which is a market monopoly. However, it should be noted that these two bills are only proposals. The EU implemented the data protection rule GDPR in 2018, but it took several years to implement the GDPR. As such, it is expected that DSA and DMA will still take time to enact and enforce legislation. On the other hand, experts believe that the two new proposals will have similar influence, just as the implementation of the GDPR has changed the way it is to protect global online privacy. Related information can be found here .