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Reinventing online platforms: is the new EU regulatory package enough?

Without mandatory interoperability, will the Digital Markets Act and Digital Service Act be enough to reset the rules for big tech?

Katarzyna Szymielewicz

23 November 2020

Reading time: 7 minutes

Section of EU flag made out of bits and bytes

In the time of the pandemic, forced to move online even the humble remains of offline life we kept, we experienced the power of digital gatekeepers. Constant tracking, intrusive profiling, manipulative advertising or arbitrary content moderation practices – none of this is new, but now we truly have nowhere to go to escape them.

The price we paid, as individuals and as societies, for access to online platforms has turned out to be unfair. The attention exploitation economy is inextricably connected with serious societal harms – including the erosion of quality journalism, filter bubbles and digital addictions. Simply placing more responsibility on those who run Google, Amazon, Facebook and Apple (GAFA) empires won’t solve our problems.

Over the past decade, we have seen enough evidence to understand that this ‘free’ content sponsored by advertisers business model cannot be fixed – it has to be reinvented.

But who has the power to do that? GAFA empires won’t reinvent themselves. That would certainly be against a short-term interest of their shareholders and might even be against the needs expressed by many of their users.

It is therefore the role of regulators, on both sides of the Atlantic, to come up with rules that will reconcile the need to maintain global and affordable communication infrastructure with other important goals, such as protecting public health, individual rights or fair play on the market. We don’t need another set of quick ‘patches’ to soothe the most painful harms, but truly systemic solutions that will change the power balance in online environments.

The regulation package recently proposed by the European Commission – composed of the Digital Services Act (a revision of the old e-Commerce Directive, meant for all online intermediaries) and the Digital Markets Act (a new, pro-competitive instrument designed for large platforms that act as gatekeepers) – has the ambition to set new rules for the game.

Although these will be European regulations, designed and enforced in Brussels, it is reasonable to expect that GAFA companies, once forced to modify their business models in Europe, will need or want to adjust their global operations as well.

The European Commission is now working on detailed proposals, which are expected to be published in December. But, based on what issues were covered by the questionnaire used for public consultations and on the first working documents that leaked from DG Connect, we can already say that the new rules for large platforms combine two valuable qualities: they remain reasonable but sound radical.

On the one hand, in the Digital Services Act the European Commission is planning to keep existing, well-established rules on content liability, which for the past two decades served as the cornerstone for the growth of social media. Facebook and similar platforms won’t be treated the same way as traditional publishers, for a simple reason: social media platforms are not traditional publishers. They operate on user-generated content, and it does make a difference in terms of their editorial capacity (even with the use of most sophisticated AI online platforms are not able to verify all uploaded content). On the other hand, it is clear that the European regulator will no longer accept that social media platforms and search engines execute their power over content and user experience without social responsibility.

In the new regulation, large, content-driven platforms will be treated for what they really are: the gatekeepers with the ability to control the flow of information, access to media and every other aspect of online experience for billions of users. Their gatekeeping power comes with the scale and well-recognised network effects, but it is also fuelled by their unique knowledge about humans. New market players simply cannot compete with more than a decade of behavioural observations and the most sophisticated algorithms trained on massive amounts of data.

The Digital Markets Act, expected to be the more radical half of the regulatory package, is meant to curb the gatekeeping power of large platforms but without ‘breaking them up’. Structural measures – such as dividing Facebook or Google into smaller, more specialised and independent companies – are not yet on the legislative table.

Instead, the Commission came up with the idea of ‘ex-ante rules’: specific prohibitions and obligations designed for a given company on a case-by-case basis. Something between an administrative decision and a regulation. Ex-ante rules will build on past experience that the European Commission and competition authorities have with large platforms and their anti-competitive practices. However, the rules will be binding, just like every other regulation, and will not require European authorities to go through another painful investigation. These rules will also be enforced like a binding regulation, so without the right for the platforms to appeal.

What exactly can we expect from such tailored ex-ante measures? Will they correct the most harmful features of large platforms’ business model? The proposals that leaked from DG Connect are promising. The European regulator is ready to prohibit GAFA from:

  • using data generated by its business clients’ activity, unless that data is also made available to them (for example, Amazon would have to start sharing the bookselling data with publishers that sell through its platform or stop using that data altogether);
  • combining users’ behavioural data from the platform with data collected from third parties (e.g. other websites) without users’ consent;
  • preferential ranking of platforms’ own offerings in their search results;
  • pre-installing own apps on manufactured devices (users should be given free choice regarding the software they want to run on their device);
  • requiring users to use a specific email provider in order to access other services offered by the platform (e.g. Android could no longer demand a Gmail address).

Targeted, correcting measures – designed for each and every large platform – are a clever way to combine the best of binding regulation and the best of administrative decision. If the European Commission delivers on this promise, users will gain access to independent, competing products and services, without being forced to leave the dominant platform. Providers of such competing products and services will have equal access to dominant platforms’ APIs and application stores. This is certainly a positive change, but in the long run both users and competitors will need more than that.

We need the EU to take one more step in the same direction and introduce mandatory interoperability (both vertical and horizontal) for all large platforms that act as gatekeepers. This is the only way to truly break lock-in effects and re-establish a competitive market for start-ups and SMEs. This is also the most promising way for individuals to execute their rights – such as the right to access, correct and move own data – without being forced to rely on large platforms compliance with the GDPR. Data rights can be, much more effectively, executed via open protocols (such as a “Do Not Track” signal) or independent, trusted agents (such as the ones proposed in the model).

But the most meaningful change, that the DSA/DMA package can bring, is to force every dominant platform to make its core functions interoperable. So not only allow its users to install independent applications and plug-ins that add value to the platform, but allow them to use software and protocols that modify or replace core functions of the platform. In this scenario users of large platforms would not only be able to connect with their contacts outside the walled garden of a certain proprietary app, but also to curate their own newsfeed and define their own content filters, using independent software. In the longer run this is probably the only way for users to escape filter bubbles, manipulative targeting and disinformation, without leaving responsibility for solving these problems in the hands of technological giants.

At this early stage of the debate about reinventing online platforms, mandatory interoperability is nothing more than a concept, which still needs to be translated into a set of carefully crafted legal measures and technical standards, but it does carry the promise of a positive disruption. Exactly the kind of disruption the EU will need if it wants to change the power balance in online environment and create space for alternative business models to emerge.

Image credit: mixmagic

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