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Today, we present two proposals that are milestones in our journey to make Europe Fit for the Digital Age: the Digital Services Act, and the Digital Markets Act.
The two proposals serve one purpose: to make sure that we, as users, as customers, as businesses, have access to a wide choice of safe products and services online, just as well as we do in the physical world. And that all businesses operating in Europe, that can be big ones, that can be small ones, that they can freely and fairly compete online, just as they do offline. Because this is one world. Whether from our streets or from our screens, we should be able to do shopping in a safe manner. Whether we turn pages or scroll down, we should be able to choose and trust the news that we read. And of course, what is illegal offline is equally illegal online.
I will say a few words about the two proposals and of course, Thierry as well, and I hope we will be able to take questions on and for you to meet your deadlines.
Introducing the Digital Services Act
I've been wondering how to give a metaphor, because these are two quite complex proposals. And the best thing I came to think of was the first ever traffic light that brought order in the streets, that was actually in the US, in Cleveland Ohio. And that was invented as a response to a major technological disruption: the invention of cars. And I think, just like back then, it is more than hundred years ago, now we have such an increase in the online traffic that we need to make rules that put order in the chaos.
That is what the Digital Services Act is all about: creating the rules, making the online world a safe, reliable and secure for all users of the digital roads. Because, we should all be able to trust what we do online. To navigate the web without being confronted with terrorist propaganda. And feeling certain that the toy we buy online is as safe just as well as the toy that we buy in a bricks-and-mortar shop.
Three main actions in Digital Services Act: more safety for users, increasing transparency of platforms and better enforcement.
Safety, first, obviously. Because, a safe digital space is one that protects users from illegal and harmful content while preserving their freedom of expression. And that is a very important balance that we have been keeping. So, we introduce new due-diligence obligations. Digital platforms will be required to swiftly remove illegal content but in parallel to explain to the user why the content was removed and give him or her a chance to complain about it. Also, the new obligations to know your customer will require online marketplaces to check their sellers' identity before they are allowed to use the platform, which will make it so much difficult for dodgy traders to do business.
Then, transparency. It is quite difficult to realise why you see this and not that. Why is one seller ranked higher than others? Why do we get to see this first, this second and something maybe not at all? So the Digital Services Act will also require platforms to tell us how their algorithms work. How their recommender systems select the content that they show us, but not require platforms to reveal their algorithms. It will give us a better idea of who is trying to influence us and how, choice as to whether we want to trust this or not.
And last but not least, enforcement. Because no legislation is any better than the enforcement of it. For people to travel safely, we need to have the same rules across Europe. This is why, it's a regulation, this is why it is based on single market legal basis. And they also need to be tied to possible sanctions. We maintain the country of origin principle that everyone knows so well. Member States will be better equipped to enforce their national laws. And the authorities where the platform is established can impose redress actions in case that platform fails to comply. So there will be a European approach to having still the country of origin.
Introducing the Digital Markets Act
Now turning to the Digital Markets Act, our second proposal. Whereas the Digital Services Act is horizontal, applies to everyone, the Digital Markets Act applies specifically to so-called “gatekeepers”.
Gatekeepers are defined by a special role that they fulfil in the marketplace. A role defined by their size, their role they play and their durability in the market. First on size: gatekeepers are large players in terms of annual turnover or market capitalization, and they are active in several member states. Second, their role: by operating as a gateway between a very large number of businesses and individual users, gatekeepers play a critical role for companies to reach their customers. Third, their durability: gatekeepers' entrenched position persists over time.
It is easy to imagine how the combination of those criteria can give gatekeepers an unfair advantage on a given service. This is not new for us. We have seen in numerous competition cases and this was one of the reasons I asked three Special Advisors to prepare a report a thinking how we can be better dealing with this unbalanced relationship. One of the things they suggested was that vigilant competition enforcement is combined with regulation.
And as you know from the cases that the Commission has been doing, where I have been responsible for, is not in one, not in two but in three Google cases, and also in the first Amazon case concerning e-books we have seen this behaviour. Many national authorities have also dealt with the issues caused by digital platforms as in the Booking.com cases. Complaints keep coming through our doors and those of fellow national enforcers, leading to a number of ongoing competition investigations.
So this is obviously to complement vigilance in competition law enforcement. This is to do the same as we have been doing in banking, in telecoms, in energy - to realise that antitrust will have to work hand in hand with regulation. So that we have a complete set of tools.
And what are these tools? The tools are actually quite simple. Once you designate a gatekeeper, it will have to live up to a number of obligations. I will just name three: the use of data, interoperability and self-preferencing.
First, the use of data: A gatekeeper gathers an enormous amount of data. They also gather unique insights into the activities of their competitors. They know who buys what, where, at which price and when. They know if you hesitated or went straight for the product. With the Digital Markets Act, gatekeepers shall no longer use the data they collect from all the businesses that they host when competing against them. They will have to create data silos that allow for separation of the data generated in their different business lines.
Second is interoperability: This concerns the specific case of a platform offering an extra service. For instance, let's say a gatekeeper develops a new payment solution. It works with a piece of software or hardware that is only available to its own payment solution. To address this issue, we have introduced a new interoperability obligation. Anytime a platform offers such a service, it needs to make sure that competing providers are not shut out from the platform.
Finally, self-preferencing: We have seen that gatekeepers treat their own services more favourably than those of their competitors. For instance, by ranking their own services higher to attract more users. To end this practice, the Digital Markets Act will oblige the gatekeeper to adjust its search algorithm to make sure rival offers receive the same level of prominence as its own offers.
In this proposal, there is a sense of future proofing. Because it is also dynamic. We can do investigations if it need be, so that we can see if gatekeepers are emerging and we can impose on them obligations.. So we can make sure that our intervention comes at the right place at the right time, before the market tips and a new gatekeeper emerges.
Here again, we have foreseen clear enforcement. If we see that a gatekeeper breaks the rules, we can impose fines. If it breaks the rules repeatedly, we can go as far as requiring structural remedies.
This is a complement to competition law enforcement. It is complex but we are looking forward to it.