BigTech vs the EU: Round I

Yesterday, a new chapter started for social media and digital marketplaces. August 25th marked the beginning of a new digital ecosystem in the EU, enforced by the Digital Services Act (DSA). BigTech platforms such as Google, Apple, and Facebook (Meta) have been preparing for this day for a while, and as a result, the “look” and “feel” of the popular platforms are beginning to change. What are the expected changes, and how will the consumers be impacted? Let’s find out.

"Allow us to track your activity across other companies’ apps and websites?"

Do you feel seen, heard, and tracked all over the Internet? You are not alone. Nowadays, platforms and marketplaces track our in-app activities and our activities across other apps and the Internet.

The data collected by smart devices and marketplaces can create a comprehensive persona of the user individuals. It may not always be clear, but many platforms use sensitive data elements (e.g., religion, sexual orientation, personal likes and dislikes, political ideology, etc.) to target users with specific content. This data is so accurate that sometimes the smart devices and marketplaces might guess and know the needs of the individual better than the individual. They can also be misleading and lead to information distortion.

The experts generally romanticize the practice of hyper-personalization. However, the process is not transparent. These personalization and targeting practices can even harm individuals with low digital and financial literacy. That's why the EU's Digital Markets Act and Digital Services Act are necessary for changing the game's rules.

What are the Digital Services and Digital Markets Acts?

The Digital Markets Act (DMA) and the Digital Services Act (DSA) belong to the EU's regulatory strategy to make the markets in the digital sector "fairer and more contestable." The regulatory framework aims to spotlight the platforms with significant user and data access, introducing more transparency, active decision-making, and power for the users. The changes are expected to create a protective layer against misinformation and hate speech.

Among the two, the DSA focuses more on ensuring transparency, user safety, and accountability, while the DMA sets the competition-related operational framework.

The framework entered into force in November 2022 and will be requested to be enforced piece by piece. The first enforcement layer invited marketplaces and platforms with access to more than 45 million EU users (defined as a "very large online platform" or a "very large online search engine") to come forward. The addressees are large digital platforms providing so-called core platform services, such as online search engines, app stores, and messenger services. They must comply with the do's (i.e., obligations) and don'ts (i.e., prohibitions) listed in the DMA and DSA.

Per the DMA, the platforms will no longer be able to

·????? Lock in users in their ecosystem.

·????? Decide which apps users need pre-installed on their devices and which app store they must use ("interoperability").

·????? Pursue "self-preference": exploiting the advantage of being the gatekeeper by treating their products and services more favorably.

The DSA also requires the platforms to fulfill many requirements concerning accessibility and transparency.

In 2023, the EU detected 19 platforms falling under the DSA scope based on the user data they were required to submit by February 17th.

Very Large Online Platforms:

• Alibaba AliExpress
• Amazon Store
• Apple AppStore
• Booking.com
• Facebook
• Google Play
• Google Maps
• Google Shopping
• Instagram
• LinkedIn
• Pinterest
• Snapchat
• TikTok
• Twitter
• Wikipedia
• YouTube
• Zalando

Very Large Online Search Engines:

• Bing
• Google Search

Since the publication of this list, the obligators have had four months to comply with the DSA, and the deadline ended yesterday (August 25th).

Amazon, TikTok, and Zalando are challenging their inclusion in the list.

The platforms have until February 17th, 2024, to fully comply with all the rules.

What Can Consumers Expect?

The changes that came into effect yesterday will directly impact users’ social media experience. Since a couple of weeks ago, many platforms announced the changes, allowing users to curate social media feeds according to their preferences. As a result,

• Users can choose to see the content from the people they follow in their feed instead of the automated recommendations forced by the platforms. These automated recommendations were blamed for the misinformation, hate speech, and even the mental health issues some users claimed to experience after social media interactions,
• Users can report posts that violate platform rules or laws with less effort.
• Users can receive search results that are in line with their search and not generated according to the algorithm,
• Users can opt-out of ranking and recommendation algorithms,
• Users can access their complete platform data.

Many platforms, such as Meta and TikTok, released statements embracing the changes. Accordingly, “Meta welcomes the principles of transparency, accountability and user empowerment at the heart of the DSA” and introduced additional transparency measures and user options as part of its “ongoing commitment to meeting regulatory obligations.”

Online platforms that don’t comply with the DSA will be fined up to 6% of their global turnover.

Long-Term Impact of the DSA

The changes started applying as of this week and will actively change the way consumers use and interact with the gatekeeper platforms. As a result of the DSA, gatekeeper platforms have been undergoing some restructuring. As a matter of fact, DMA and DSA were the reasons behind Meta’s decision not to launch “Threads” in the EU.

The gradual changes are likely to improve the social media experience and ban the practices that are not consumer-friendly. Further changes to marketplaces and platforms will likely cause a decrease in ad revenue, challenging platforms’ market hierarchy and forcing them to change business models.

Flipping the coin, the changes will likely create a more transparent and fairer digital experience for consumers. As a result, the social-media-related discontent and discomfort will likely decrease, impacting a wide range of issues from mental health, social interactions, shopping behaviors, and frequency and election validity.

As usual, the changes are expected to inspire the non-EU regulators and will likely trigger a global battle against the BigTech. Consequently, BigTech will likely strengthen their platforms in regions with “more lobbying power” and keep a lower profile in markets with more robust consumer protection mechanisms. Regardless, a small step from the BigTech platforms can significantly impact users' daily lives.

Thumbs up for a more positive and empowering social media experience!

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