The current crisis has highlighted more than ever the need for massive investment in the digital sector. Immediately after the elections, the European Commission presented a European Union digital strategy to eventually create a Digital Single Market, so necessary during a pandemic like the one we have experienced in recent months. This has set out some guidelines for future Digital Single Market regulation, in line with the proposed objectives for the digital transformation of the European Union set out in the document "Europe Fit for the Digital Age"(1). So we find measures that concern technology developers, digital platforms, brands and online services. And the fact that some of the measures are in the run-up to implementation, while others are in the consultation process, prompts us to present them and bring them to public attention.
Regulation on promoting fairness and transparency for businesses using online brokerage services ("Platform-to-Business" - P2B)
The Platform-to-Business(2) (P2B) Regulation of 20 June 2019, which will enter into force at European level on 12 July 2020, is a first set of rules to create a transparent, fair and predictable regulatory framework for small businesses and online service intermediaries. P2B essentially provides for the regulation of certain prohibited commercial practices and will have a considerable impact for digital platforms providing services in the European Union.
Given the particularities of the digital market, in general, online intermediary service providers often benefit from a superior market position, which may facilitate the use of unfair commercial practices and distort the internal market. At the same time, there may also be a negative effect resulting from the promotion of unilateral commercial practices by platforms in dominant market positions and others. For this reason, it is essential to maintain a 'competitive, fair and transparent online ecosystem'(3) to ensure that the rights of traders and end consumers are respected.
The Regulation has created fair standards of transparency in the digital business environment to support the work of businesses (e.g. small and medium-sized enterprises) and independent traders using digital platforms. As a result, certain commercial practices relating to the restriction, suspension and termination of online brokerage services by a provider(4) and the imposition of retroactive measures of terms and conditions(5) were essentially regulated.
The Regulation is therefore of particular importance in terms of the mechanisms it provides for establishing fairness and transparency between the relations between platforms and the business environment.
At present, the draft emergency ordinance of the Romanian Government on the measures for the implementation of the P2B Regulation and for the completion of the Competition Law no. 21/1996 is at the stage of public consultation, until 3 July 2020.(6) Thus, once the legislative measures are implemented, the competent authorities will ensure the monitoring of the fulfilment of the obligations by the providers of online brokerage services and the providers of online search engines under the P2B Regulation, and in case of non-compliance, the appropriate sanctions will be applied.
Digital Services Act (DSA) package
The Digital Services Package(7) aims to clarify the legal liability regime for online platforms and the rules on online services. It will include two main areas of regulation: moderation of online content and the introduction of ex-ante measures to ensure competitive markets. The legislative package, as designed, represents a step forward for the evolution of Europe's digital economy and ensuring the conditions for respecting the rights of European citizens who benefit from online products and services.
We believe that new legislative measures on digital services are needed, as the current technological advance is not adequately regulated, allowing some companies to benefit from market dominance, while the rights of other traders or consumers may be restricted. Currently, information society services are regulated under the e-Commerce Directive, adopted 20 years ago. It is clear in this case, given the development of digital services, the diversity of new online business models and the services made available to consumers, that a new regulatory approach is needed that is appropriate to the degree of innovation of the online platform economy, while at the same time mitigating the risks for consumers. In the following, we look at the main provisions of the digital services package.
Moderation of online content - between freedom of expression and accountability of digital platforms
The European Commission aims to introduce rules for digital services to protect consumer rights. So online platforms will be subject to a legal regime that ensures the functionality of the modern digital system, but will also penalise platforms if they do not comply with the new rules.
The e-Commerce Directive, as currently applied, does not make intermediaries legally responsible for the content they distribute under certain conditions, and does not impose a general obligation to monitor information from platforms that make content available online.
The Digital Services Act therefore aims to establish clear rules for the legal liability regime of online platforms for the content they disseminate. The subject has also been dealt with previously in the Copyright Directive(9), which must be transposed in the Member States by 7 June 2021. Thus, it states that "if no authorisation is granted, providers of online content sharing services shall be liable for unauthorised acts of communication to the public, including making available to the public works protected by copyright or other protected subject matter (...)"(10).
In practice, online service providers will be legally liable for the dissemination of information, so they will have to adopt strict measures to monitor online content. One example of monitoring measures would be automatic moderation of online content through filters using algorithms, but this practice leads to other problems related to respect for freedom of expression and free access to information. However, there are also more permissive elements, e.g. the final text provides for the exemption of some online content sharing service providers from this liability regime. This exception only applies to those who are relatively new to the market (less than 3 years in business and whose annual turnover is less than EUR 10 million)(11).
We believe that the best perspective from which to view the Digital Services Act would be to find a way to modernise the current legal framework and legislate legal liability, but without creating unreasonable obligations for digital platform players. Measures should include ways to remove illegal content without restricting access to information and freedom of expression, but also effective redress and notification mechanisms where legal content has been wrongly removed due to the inefficiency of automated algorithms to distinguish between certain exceptions and limitations to the copyright regime.
There are also other initiatives on moderation of online content, such as the Commission Recommendation on measures to effectively combat illegal online content(12) and the Code of Conduct on combating illegal online hate speech(13). The Code of Conduct is adopted by large platforms such as Facebook, YouTube, Twitter, Microsoft, Instagram, Dailymotion, Snapchat and Jeuxvideo.com, with the aim of resolving most content removal requests in less than 24 hours without affecting freedom of expression online. Following the fifth monitoring exercise on the application of the code, the results showed that there were prompt responses to content removal notices, but also an increased need to promote transparency and measures communicated to users.(14) This is also where the rules to be introduced by the Commission come into play, as recommendations and codes of conduct lack the legal force to ensure effective control and sanctions in case of non-compliance with voluntary obligations.
Last but not least, it is essential to note the approach taken by the major social platforms to content moderation. Facebook appointed an oversight board of 20 independent free speech experts in May this year to address controversial online content moderation issues. Twitter has also banned political ads, but Facebook says it will not verify politicians' statements or ban them from distributing political ads. In the past, Cambridge Analytica has interfered through Facebook's platform in determining the outcome of the US presidential election and is investigating whether it also impacted the Brexit referendum. So by influencing how content was distributed to users on the Facebook social platform, users' political decisions could be changed. Therefore, proper regulation of online content moderation is needed to address these issues at European level.
Thus, when drafting the Digital Services Act, we believe that standards should be introduced to provide greater protection for users in moderating online content, but without restricting innovation and limiting the activity of platforms. European policy makers must take into account both respect for consumer rights and the proper functioning of the digital platforms ecosystem.
Introducing ex-ante measures to regulate dominant online platforms
The second main pillar included in the Digital Services Act concerns the introduction of ex-ante measures to be applied to online platforms which, by virtue of their market position, act as gate-keepers. That is, they act as intermediaries between end consumers and online products, services or content, and influence the functioning of the digital marketplace and the actions of competitors.
There are several possibilities for regulating online platforms, which have been analysed in the impact assessment on the introduction of ex-ante measures. These are necessary to ensure fairness and transparency in the markets in which these dominant platforms operate, but also to implement adequate control over them.(15) There are several factors that call for new regulation of digital platforms, especially considering the impressive data sets they accumulate, the facilities they have to gain technological edge, the advantages they easily gain in new relevant markets and the primacy they enjoy over competitors. (16) Complementary to the application of the P2B Regulation, competition instruments and consumer enforcement rules, the study proposes multiple solutions to introduce ex-ante measures. Possible regulatory approaches therefore include revising the framework set out in the P2B Regulation, adopting a framework to facilitate access for regulators to collect information from different platforms or adopting a flexible legislative framework for introducing ex-ante material measures (beyond the transparency standard).
However, the imposition of ex-ante rules is a first in the area of platform regulation, which shows that European decision-makers currently consider that competition law rules are not sufficient to solve the structural market problems of digital services and platforms. Considered as one of the most stringent approaches, it is important that intervention does not create a significant disadvantage for some digital business models and does not reduce innovation in the online environment. Therefore, the appropriateness of introducing ex-ante regulation needs to be carefully considered in order not to allow abuses to occur, but also to establish the highest level of protection for consumers without creating an imbalance in the Digital Single Market and without harming innovation.
For the time being, the digital services legislative package is in public consultation until 8 September 2020 to analyse the feasibility and advisability of legislative intervention at European level in this area.
New Competition Tool (NCT)
The European Commission's initiative to introduce a new competition instrument, the New Competition Tool(17) (NCT), aims to address some of the limitations of European competition law to enable effective intervention against structural market problems. The proposal is currently in public consultation until 8 September 2020 and coincides with the end of the public consultation for the Digital Services Package. Adoption of the instrument is planned for the last three months of this year.
European competition law will continue to apply to anti-competitive agreements, criminalised under Article 101 of the Treaty on the Functioning of the European Union(18) (TFEU), and to abuse of a dominant position by companies under Article 102 TFEU.
The preliminary impact assessment of the new competition instrument mentions four regulatory options, aimed at applying the instrument to all sectors of the economy, or limited to certain digital sectors, and also envisages regulatory approaches based on the structure of markets or the dominance of companies, before determining infringement of Article 102 TFEU.
The Commission therefore proposes to intervene by imposing behavioural and structural remedies where necessary and the new competition instrument is designed to complement the ex-ante regulatory proposal in the Digital Services Act.
These topics were discussed during the webinar "Regulation and competition in digital markets", held on 2 July from 11:00-12:00: 30, by Europuls - Centre of European Expertise and the Liaison Office of the European Parliament in Romania, with the guests Bogdan Chirițoiu - President, Competition Council, Victor Negrescu - MEP, S&D, Dragoș Tudorache - MEP, Renew Europe, Oleg Roibu - Legal and Public Policy Director, eMAG and Răzvan Antemir - Senior Manager for Government Affairs, AIM - European Brands Association.
Among the conclusions of the event that brought together the Romanian competition authority, European policy makers and private sector representatives, we find the need to promote priorities to support the development of infrastructure in the digital sector and to determine the legal framework that provides greater protection for consumers in the online environment and that favours innovation, and it is also essential to maintain a high degree of competition in the digital market.
References
(1)European Commission Strategy, Priority "Europe fit for the digital age", https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age_ro
(2) Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for businesses using online intermediary services, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32019R1150
(3 ) Ibid, (1)
(4) Ibid, Article 4
(5) Ibid, Article 8 (a)
(7) Digital Services Legislative Package, https://ec.europa.eu/digital-single-market/en/digital-services-act-package
(8) Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce), https://eur-lex.europa.eu/legal-content/RO/ALL/?uri=CELEX%3A32000L0031
(9) Directive 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the digital single market and amending Directives 96/9/EC and 2001/29/EC, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32019L0790
(10) Ibid, Article 17 (4)
(11) Ibid, Article 17 (6)
(12 ) https://ec.europa.eu/commission/presscorner/detail/ro/MEMO_18_1170
(13) https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1135
(14 ) Ibid
(15 ) Preliminary Impact Study on the introduction of ex-ante measures in the Digital Services Package, https://ec.eur