Author: Vassilia Orfanou, PhD, Post Doc
Headline Diplomat eMagazine

The new digital ecosystem: regulatory environment

The UN High Commissioner for Human Rights, Michelle Bachelet commented “The same rights exist on the Internet as outside of it”. And she continued “there is a black hole in terms of human rights”.

We are in the maturity and complete expansion of the third industrial revolution that emerged in the mid-twentieth century. The debate on the fourth industrial revolution has already begun. In it, digital technologies converge with disciplines such as physics, chemistry, biology, and other natural sciences in the total automation of production processes and services that take place in the business field and daily life.

Digital services are provided worldwide without international barriers, and the data acquired through them is the new engine of the digital economy. Security and digital sovereignty are incorporated into the roots of the geostrategies of the most powerful economies, particularly the United States and China; Some obvious examples are the rivalry for control over 5G or Artificial Intelligence. These two players are starting to change how digital markets work, making the current regulatory framework obsolete. Amid this struggle, Europe is trying to develop a legal and ethical framework that guarantees the safety and rights of its citizens.

The main objective of the European Commission and governments is to defend the general interest, which is to guarantee that citizens maintain their rights; companies can enjoy equal conditions, and the digital economy is fair, innovative, and competitive. Therefore, we can highlight the three main roles assigned to the State in market economies:

Ensure competition between markets
Manage public resources efficiently
Guarantee the rights and freedoms of all citizens.

There are several types of intervention, each with an economic effect and affecting the different agents asymmetrically. In the first place, the technical regulation derived towards the standardisation of processes, such as the new regulation for 5G antennas; second, economic regulation, to guarantee fair competition within the market, for example, the digital services law; third, the political regulation that guarantees the rights of users, such as the General Data Protection Regulation; and, finally, support for specific activities and sectors through the financing of R&D&I, taxation and sectoral aid.

Europe is a leader in regulating the digital ecosystem to maintain digital sovereignty. One of the engines is the digital single market, which allows products and services to flow freely within the Union.

Another is the deep concern for the rights of citizens, especially towards privacy. And finally, due to the absence of a highly developed digital sector, Europe has chosen to restrict the power of large digital platforms (GAFA) through strict regulation that empowers SMEs.

“What we want is simple: fair markets…in digital,” said EU antitrust chief Margrethe Vestager. “Large gatekeeper platforms have prevented businesses and consumers from the benefit of competitive digital markets.”

However, Europe has a difficult road ahead of it; as we have seen above, technologies are advancing rapidly, making it more difficult for regulators to keep up.

Digital rights at the center of legislation

In the communication market, particularly in the social media market, a few big tech companies act as both the “economic” and “human rights” gatekeepers. Why? They simply have an impressive influence on how people express rights in the digital ecosystem, particularly the right to privacy, freedom of information and expression.

The European Parliament has identified three key areas that need renewal: digital platforms, artificial intelligence, and the data economy. The European Commission is addressing this gap with three new regulation proposals, the Digital Services Law, the Artificial Intelligence Law, and the Data Governance Law.

The rights of citizens, and in particular digital, are highlighted in the DSA and the DMA. This is not the first time in Europe, since the GDPR was based on the same values. First, respect for user privacy. This is one of the potential contributions of DMA. This act aims to re-create competition between digital players, by putting clearer rules on the mechanisms that build it.

Next, we will briefly describe some of the most outstanding characteristics of these regulations:

Digital Services Act

The Digital Services Regulation, frequently cited as the Digital Services Act (DSA), was born within the European Commission in December 2020 to adapt the reference framework for internet intermediaries, outlining new obligations for them, particularly for online platforms.

According to the European Commission President Ursula von der Leyen, in a press release, “The DSA will upgrade the ground-rules for all online services in the EU. It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses.

“It gives practical effect to the principle that what is illegal offline, should be illegal online. The greater the size, the greater the responsibilities of online platforms. Today’s agreement – complementing the political agreement on the Digital Markets Act… – sends a strong signal: to all Europeans, to all EU businesses, and to our international counterparts.”

However, it is essential to note that the new regulation will not repeal the fundamental principles described in the e-commerce directive, such as the exoneration of responsibility of the platforms or the principle of country of origin.

In summary, the DSA is a horizontal norm in which the reference framework defined in the 2000 electronic commerce law is updated. A new series of online providers’ basic responsibilities are defined in it. Also in it are new vertical regulations such as the terrorist content regulation or the copyright directive.

However, one of the criticisms that could be addressed to the DSA relates to freedom of expression and moderation of content, the balance of which is difficult to find on social networks, in particular. Several associations have indeed pointed out the flaws in the notification and removal mechanism for allegedly illegal content.

For example, Konstantinos Komaitis, Senior Director, Policy Development at the Internet Society, argues on the platform of the Open Access Government that “upload filters should not be part of the proposed DSA legislation,” in an article titled: “The Digital Services Act is tiptoeing towards regulatory failure.”

Digital Markets Act

The Digital Markets Regulation, known by the acronym DMA (Digital Markets Act), was born at the same time as the DSA (but a month apart) to regulate fair practices within the single market, establishing the provisions applicable to platforms that act as gatekeepers.

Following the agreement for the DMA, Margrethe Vestager, the executive vice-president for the EU’s digital strategy, took to Twitter to declare the commission’s resolutions and what it seeks to achieve.

“What we want is simple: Fair markets also in digital. We are now taking a huge step forward to get there – that markets are fair, open and contestable.

“Large gatekeeper platforms have prevented businesses and consumers from the benefits of competitive digital markets. The gatekeepers will now have to comply with a well-defined set of obligations and prohibitions.

“This regulation, together with strong competition law enforcement, will bring fairer conditions to consumers and businesses for many digital services across the EU.”

Gatekeepers are platforms that act as a gateway for other companies to reach their customers, giving them a privileged position on the market, creating private standards or even controlling entire ecosystems of platforms. Thanks to the new regulation, gatekeepers can avoid unfair practices, allowing dependent companies to offer services more equitably and consumers to have a greater choice between services.

In addition, to ensure that these regulations do not become obsolete, the Commission will conduct periodic market research to redefine the thresholds that define a Gatekeeper, update their obligations, and design remedies to combat systematic violations.

Data Governance Regulation

As part of the new European data strategy, the Commission presented in November 2020 the new proposal for a regulation for data governance to promote the use of data by increasing trust in intermediaries and improving transmission mechanisms of data between member states. In addition, the new regulation will ensure that member states’ actions on data are coordinated to avoid fragmentation of the single market.

According to a press release on the act by the European Commission, “the Data Governance Act will create a mechanism to enable the safe reuse of certain categories of public-sector data that are subject to the rights of others.”

This governance act also includes regulations on personal data, intellectual property rights, and trade secrets. “This [the Data Governance Act] includes, for example, trade secrets, personal data, and data protected by intellectual property rights. Public-sector bodies allowing this type of reuse will need to be properly equipped, in technical terms, to ensure that privacy and confidentiality are fully preserved.”

“Exclusive arrangements for the reuse of public-sector data will be possible when justified and necessary for the provision of a service of general interest. The maximum duration for existing contracts will be 30 months and for new contracts 12 months.”

In the proposed Regulation of the Commission, the conditions of reuse of categories of protected data held by public entities are addressed, complementing the current directive on open data in which the use of data not considered open data is not addressed and which is resolved through an anonymization process; a supervisory framework is created for data-sharing services as well as a series of conditions that the providers of said services must comply with; and a framework is created for the registration of entities that use data altruistically, to achieve full trust with minimum administrative burden.

Conclusion

The digital transformation has brought undoubted advantages, some inalienable. Therefore, the answer cannot be articulated from the frontal opposition to technology but through its humanisation. That’s why it’s essential that:

There’s a priority of the human being over all his creations, such as technology, which is at his service.
The prevalence of the common good over private interests, however, majority and legitimate these may be.
Equity and universal justice in access, protection, and enjoyment of digital goods and the rights that enable a life with dignity as a human being.

We are convinced that it is not the Internet that reduces human rights but the lack of ethics on the Internet.

The European DSAs and DMAs aim to put citizens’ rights back at the center of technology and to restore an ounce of justice within an ecosystem plagued by monopolies. But more is needed to be done on regulating the stakeholders to ensure human rights laws are upheld in the digital ecosystem.

We, therefore, call to further strengthen the protection of human rights in the digital age. Internet freedom and digital human rights must be new foreign policy priorities. After all, digitisation harbors new opportunities for protecting human rights and new challenges.

When it comes to expanding human rights protection in the digital age, States, companies, and human rights organisations must take a leading role as part of an effective cyber security strategy in Europe and internationally – particularly on the right to privacy, anonymity on the internet and encryption, as well as the protection of personal data and against mass surveillance.

Featured photo by Pavel Danilyuk, Pexels.