DSA vs. DMA: How Europe’s twin digital regulations are hitting Big Tech

It’s no accident that the European Union’s Digital Services Act and Digital Markets Act have such similar-sounding names: They were conceived together and, at the end of 2020, proposed in unison as a twin package of digital policy reforms. EU lawmakers had overwhelmingly approved them by mid-2022, and both regimes were fully up and running by early 2024. While each law aims to achieve distinct things, via its own set of differently applied rules, they are best understood as a joint response to Big Tech’s market power. Key concerns driving lawmakers include a belief that major digital platforms have ignored consumer welfare in their rush to scale fatter profits online. The EU also sees dysfunctional digital markets as undermining the bloc’s competitiveness, thanks to phenomena like network effects and the power of big data to cement a winner-takes-all dynamic. The argument is that this is both bad for competition and bad news for consumers who are vulnerable to exploitation when markets tip. Broadly speaking, the DSA is concerned about rising risks for consumer welfare in an era of growing uptake of digital services. That could be from online distribution of illegal goods (fakes, dangerous stuff) on marketplaces or illegal content (CSAM, terrorism, etc.) on social media. But there are thornier issues, for example, with online disinformation: There may be civic risks (such as election interference), but how such content is handled (whether it’s taken down; made less visible; labeled, etc.) could have implications for fundamental rights like freedom of expression. The bloc decided it needed an updated digital framework to tackle all these risks to ensure “a fair and open online platform environment” to underpin the next decades of online growth. Their goal with the DSA is absolutely a balancing act, though: The bloc is aiming to drive up content moderation standards in a quasi-hands-off way: by regulating the processes and procedures involved in content-related decisions, rather than defining what can and can’t be put online. The aim is to harmonize and raise standards around governance decision-making processes, including by ensuring comms channels exist with relevant external experts in order to make platforms more responsible in moderating content. There’s a further twist: While the DSA’s general rules apply to all sorts of digital apps and services, the strictest requirements — concerning algorithmic risk assessment and risk mitigation — only apply to a subset of the largest platforms. So the law has been designed to have the greatest impact on popular platforms, reflecting higher risks of harm flowing from stronger market power.