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The end of the Internet Titan dictatorship? New rules on digital services promise to reveal algorithms

Mikuláš Peksa:

The European Union wants to replace pre-Facebook regulation with new digital services legislation.

Concerns over the disproportionate influence digital service providers wield are old news. From the ability to promote one’s own products or the de facto duopoly of mobile operation system developers, the digital market is overloaded with aspects that have nothing to do with fair competition and equal opportunities.

Google’s and Facebook’s abuses of their market dominance are a publicly known fact, mapped, for example, by The New York Times and mentioned even in the recent Commission briefing on the legislative proposal that we will analyse here.

It is true that when it comes to online platforms, social networks, and advertising companies, we do have at least a basic standard-setting tool. For tackling disinformation, we have a common European Code of Practice, the product of negotiations and an agreement between the European Commission and large online platforms.

The idea is that this set of commitments will contribute to a more trustworthy and less toxic environment online, from  “transparency in political advertising” to “the closure of fake accounts and demonetisation of purveyors of disinformation”. However, it is only a voluntary pact based on self-regulation, which means the enforceability of these commitments is rather dubious. Since it is focused on disinformation and freedom of speech, it only spares a cursory glance for unfair business practices. That is where the new Digital Services Act (DSA) comes into play.

It probably won’t surprise you that the EU has already tried to set the rules of the Internet business game once in the past. The so-called eCommerce regulation was adopted at a time when desktop screens were the same size as 20th century TVs. With only eight pages, the 2000 core text could hardly cover all the sprawling Internet service providers, let alone the sophisticated structure of the digital giants.

However, it is clear that their power needs curbing – if only because exploiting their market dominance is closely tied to the business models of Internet companies.

The central idea of the DSA is to modernise the Eu’s approach to digital services and make them more transparent, accessible, and free. The regulation the Pirates in the European Parliament have been working on contributes to this in several specific and critical points.

I believe the most important one is the goal to protect the interests of individual users and smaller players by clearly delimiting rights and removing illegal content. The current situation allows large platforms to evaluate and remove content behind closed doors based on their own internal rules – this goes for products in online stores, as well as comments on the Internet. This may mean perfectly legal content gets removed. The avenues for the review of these decisions are quite restricted. Both should change with the onset of the DSA.

By unifying the obligations of digital companies throughout the EU Member States and clarifying the process of removing content, we will also make it more certain that illegal content will really be removed in accordance with national regulation. We also need to distinguish between harmful and illegal content. What is illegal offline must also be illegal online. However, digital companies are not institutions and should not be the ones to make these decisions.

I am therefore delighted that the proposal clearly says that ‘harmful’ content ‘should not be defined in the Digital Services Act’. Online content should only be removed when it is illegal, which is what the DSA should be based on.

The proposal also includes a clear reporting system, which respects national legislation and is user-friendly.

Platforms can violate users’ freedom of expression or their ability to promote their products by deleting content. Making their decisions reviewable is key for protecting free, inclusive debate and trade. This will also be important for the so-called “upload filters”, which can put the desired reviewability at risk, but I will mention that in more detail later.

Illegal content is only the tip of the iceberg when it comes to digital services. The DSA also introduces clear requirements on algorithm transparency in digital services. It plans to let users select the criteria that platforms will use to recommend content to them. Or avoid personalised recommendations altogether.

Large online platforms whose reach exceeds 10 % of the EU’s population (45 million users) will also be labelled “systemic”, and their algorithms will fall under the scrutiny of European regulators. Therefore, large network users will gain more certainty that they are not being subjected to mass systemic manipulation through the information that the algorithms feed to them.

As I have mentioned, the Internet market has certain characteristics that give an advantage to large companies with diversified business fields. The digital world is not guided by traditional “textbook” principles of free competition but by one rule only: the winner takes it all.

Smaller companies that want to use digital services often have no choice now: they have to comply with the rules and demands of big players who want to keep a hold on their know-how and their algorithms. Entering the market is expensive, and the big players do their best to hinder any newcomers, meaning there is no real competition, or it is controlled by “market leaders”.

Ken Paxton, Republican Attorney General of Texas, fittingly summarised the current situation in his video announcing his plan to sue Google for its monopolistic practices. “If the free market were a baseball game, Google positioned itself as the pitcher, the batter and the umpire.” This criticism might sting even more coming from a Republican since the party has been relatively lax regarding state interventions “straightening out” the market.

The consumer loses out the most, naturally: Digital services are essential in almost any sector now, and the lack of choice between multiple alternatives only solidifies the dominance of large companies. The lack of competition allows them to hike up prices or set less favourable conditions for their users.

The DSA is trying to rectify this sorry state of things as well – for example, by restricting how search engines favour their own projects in searches or by ensuring external audits for the largest online platforms.

Few technologies impact our everyday lives as much as the Internet, whether we read pre-selected online news in the morning or order our dinner by an app at night.

It is therefore understandable that many individuals and companies built their businesses around providing digital services, and the size of the digital sector corresponds to this. The UN estimates that the digital economy is responsible for ca. 4.5 % to 15.5 % of the world’s GDP, which is equal to the GDP of the entire EU.

Yet that does not mean that a handful of big players should have the right to claim the digital space for themselves – for example, by virtue of being there first. This runs contrary to the market principles of free competition, which our economy is based on, but it also makes it easier for the “giants” to overlook the interests of smaller companies and suppliers, as well as the end-users.

It is time for Europe to re-evaluate its views from the time before Google, Facebook, and Amazon and update its rules so that they don’t stifle innovation but provide sufficient protection to users. That is the only way we can build a modern, flexible, and free Europe.


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