New binding regulations to tackle illegal content and products online, stricter rules for targeted advertising and ex ante rules for “gatekeeper” online platforms are just some of the demands of Members of the European Parliament for the forthcoming Digital Services package. The highly anticipated proposal, due to be unveiled by the European Commission on 2 December, is expected to form the most significant legislative intervention in the digital economy since the e-Commerce Directive in 2000.

The European Commission’s Executive Vice-President, Margrethe Vestager, who has overall responsibility for both digital policy and competition enforcement, hinted last week that this proposal could be combined with plans for a new Competition Tool, in a text called a “Digital Markets Act”. This means that a market investigation tool that was originally planned to have a broad scope and apply to all sectors, including financial services, would now focused mainly on large digital platforms. The anticipated new regulation on content moderation would remain in a separate proposal.

While the Commission still ponders the shape of its future proposals, three European Parliamentary Committees recently adopted reports under the working title of “Digital Services Act”. These reports from the Legal Affairs, Internal Market and Civil Liberties Committees, which are due to be endorsed by the whole Parliament during the plenary session of 19-22 October, shed light on the wish-list of MEPs for future regulation in this area.

Parliament’s regulatory hit list

The relevant parliamentary Committees have asked the Commission to include the following specific demands in its forthcoming legislative package:

Illegal and Harmful Content: EU-wide standards should be introduced for the way in which hosting platforms moderate content. This should include updated “notice and action” procedures to protect users from illegal content and harmful content such as fake news or disinformation;
Filtering: platforms should not employ upload filters or any form of ex-ante content control for harmful or illegal content, while final decisions should be taken by an independent judiciary and not by private undertakings;
Know your Business Customer: platforms and online intermediation services should improve their efforts to detect and take down false claims, counterfeit or unsafe products and tackle rogue traders. A “Know your business customer” principle should require platforms to check and stop fraudulent companies using their services;
Liability Regime: MEPs recommended retaining the limited liability regime for intermediaries in the e-Commerce Directive and maintaining the ban on imposing general monitoring obligations on online platforms;
Targeted ads: targeted advertising must be regulated more strictly in favour of less intrusive, contextualised forms of advertising that require less data. There should be a right to use digital services anonymously whenever possible;
AI-driven services: consumers should have a right to be informed and the ability to opt out if a service is enabled by AI, makes use of automated decision-making, machine learning or automated content recognition tools;
Specific ex-ante rules for “gatekeepers”: an internal market instrument should be imposed with ex-ante obligations on large platforms that act as “gatekeepers”. The aim would be to prevent, instead of merely remedy, market failures caused by such “systemic operators” and open up markets to new entrants, including SMEs;
Compliance: the Commission should examine options for a European body to monitor the compliance of online platforms with the new rules and impose fines;

Next steps

The above-mentioned Reports were adopted with a number of amendments during the 19-22 October plenary session. The consolidated reports will now be sent to the Commission to feed into its proposal for a legislative package, currently expected for 2 December, 2020.

Useful links

Legislative Initiative Report on the Digital Services Act by Tiemo Wölken (S&D, DE) for the Legal Affairs Committee
Legislative Initiative Report on the Digital Services Act by Alex Agius Saliba (S&D, MT) for the Internal Market Committee
Initiative report by Kris Peeters (EPP, BE) for the Civil Liberties Committee

For further information contact Francine Cunningham