Digital Services Package: EU’s shot at relevance

This is momentous, but only for reasons I’ll mention later. First the announcement:

Digital Services Package

The Digital Services Package sets out a first comprehensive rulebook for the online platforms that we all depend on in our daily lives. These new rules will be applicable across the whole of the EU and will create a safer and more open digital space, grounded in respect for fundamental rights.

Executive Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager, said: “The European Parliament has adopted a global first: Strong, ambitious regulation of online platforms. The Digital Services Act enables the protection of users’ rights online. The Digital Markets Act creates fair, open online markets. As an example, illegal hate speech can also be dealt with online. And products bought online must be safe. Big platforms will have to refrain from promoting their own interests, share their data with other businesses, enable more app stores. Because with size comes responsibility – as a big platform, there are things you must do and things you cannot do.”

The restrictions are straightforward:

1. New frameworks for “digital gatekeepers” like Apple and Amazon.
2. Third-party stores on Apple, possibly.
3. Apple is likely to be banned from advertising its own services and highlight equivalent competitors.
4. It will bar companies from vertical integration – for example, Microsoft bundling Teams with Office (both sub-par applications, though).

The Digital Services Act has different ramifications:

1. Keeping users safe from “misinformation” and additional responsibility to moderate content by the social media companies, specifically.
2. Allow users to opt out of the algorithmic targeting.
3. It will enforce bans on “dark-patterns” – for example, making it difficult for individuals to opt out of subscriptions.
4. There are other provisions to avoid manipulation of “democratic processes”.

As it’s obvious, EU loves bureaucracy, there will be an oversight board to enforce these. They call it a “taskforce”. It is unclear if they will compel organisations to “disclose” their algorithms.

The EU clearly understands it missed the bus on the “technological revolution”. It is a delaying tactic to stall big tech (mostly American companies) while they gag companies with a constant egress of data from their boundaries and build “fabs” to develop chips used in the AI processing. It’s a catch up. I expect big-tech companies invent clever ways to circumvent specific loopholes; or don’t expect Apple’s cash-cow to be butchered by the EU boffins. This legislation might be quixotic in its approach (cloaked under the semblance of “human-rights” and “privacy”), but it will generate a lot of “liberal ink”. The big question is whether the EU can catch-up with “rest of the world” and pivot towards AI delivery of services and have co-existent manufacturing. Its nerve centre, Germany, is reeling in recession and will drag the ship down.

Yet, these developments are critical for other developing countries to form blocks and counter the big-tech onslaught. It will be difficult for individual countries to enforce rules to contain Facebook, for example. Unless the government pushes to localise data or establish common open standards for digital communication, these companies will entrench themselves and entangle in the digital lives of its users. The EU legislation (and its fallout) may present itself as a test-case, especially as it is likely to be challenged for its provisions.