LONDON — The European Parliament has passed sweeping legislation governing how online platforms and marketplaces tackle the spread of illegal content, and placed new obligations on digital services around the sharing of information.
Members of the European Parliament (MEPs) passed the Digital Services Act on Tuesday in its first reading by a clear majority of 539 votes in favor, with 54 votes against and 30 abstentions. In the same voting session, held in Strasbourg, France, the Parliament also adopted the Digital Markets Act, which passed by a majority of 588 votes for, 11 votes against and 31 abstentions.
Although neither bill is specifically targeted at the music industry, both establish clear rules and regulations for all online services operating in the European Union, including ticket resale sites like Viagogo and StubHub, social media platforms such as Twitter and Facebook that heavily feature music content, and tech giants like Apple, Amazon and Google.
The legislation comes three years after the European Union’s Copyright Directive officially came into force, governing how user generated content (UGC) platforms like YouTube and Dailymotion operate. The Digital Services Act and Digital Markets Act are far broader pieces of legislation that apply to all digital platforms operating in the 27 EU member states, not just UGC platforms, and they are intended to “comprehensively regulate the gatekeeper power of the largest digital companies.”
The legislation will force big platforms “to refrain from promoting their own interests, share their data with other businesses, [and] enable more app stores — because with size comes responsibility,” Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age, said following the bills’ adoption.
Commissioner for the Internal Market Thierry Breton said the Digital Services Act (DSA) and Digital Markets Act (DMA) turn “the page on ‘too big to care’ platforms” creating a “safer and fairer digital space” for more than 450 million EU citizens.
New obligations introduced in the Digital Services Act include the requirement for online platforms to prevent the distribution of all forms of illegal content and quickly remove any that passes through.
Platforms and digital service providers will also be subject to increased transparency, reporting and accountability requirements, providing vetted researchers and regulators with access to their data and algorithms that determine how they recommend content to users.
Online platforms with 45 million monthly users in the face a set of stricter obligations, including preventing the spread of disinformation and other societal risks that impact on electoral processes, users’ mental health or encourage acts of violence.
For ticket resale marketplaces such as Viagogo or StubHub, there will be tougher checks on traders, including the requirement to collect and verify information on professional sellers before they are allowed to list tickets.
Platforms selling concert tickets will also be required to conduct random spot-checks for listings that contravene national laws, as well as produce annual transparency reports on takedowns of illegal content. The legislation bans what it terms as “dark patterns” – manipulative advertising practices, such as pop-ups, that try to pressure buyers into making purchases they did not intend to make.
“This is a landmark moment for Europe’s live performance industry, which sees billions of euros drained from it annually by ticket scalping,” says Sam Shemtob, director of The Face-value European Alliance for Ticketing (FEAT). Shemtob says the Digital Services Act “will be instrumental in helping to protect consumers and live events businesses from exploitation at the hands of ticket scalpers.”
Per Kviman, CEO of Versity Music and chair of the European Music Managers Alliance, which represents 1,800 music managers in 10 European countries, calls the reforms an “an important step towards increasing accountability” that will contribute towards “a healthier European touring industry.”
The Digital Markets Act targets large online platforms that the European Commission terms as “gatekeepers” —platforms whose dominant online position make them hard for consumers to avoid. For those companies, the new laws will force them to allow third party operators to operate more freely within their platform, enabling users to exchange messages or files across different apps. Gatekeeper platforms will also be required to provide other businesses access to the data they generate in the dominant platform, allowing smaller services to contact their customers directly and promote their own offers.
To ensure that the rules of the DMA are followed, the European Commission has the authority to carry out market investigations. In instances where a platform is found to not be complying with the law, the Commission can impose fines of up to 10% of a company’s total worldwide turnover in the preceding financial year, or up to 20% in cases of repeated non-compliance.
Following Tuesday’s vote, the European Council will formally adopt both bills later this year (the DMA in July and the DSA in September), and they will enter into force 20 days after their publication in the EU Official Journal. The terms of the Digital Markets Act apply six months after it enters law; the Digital Services Act comes into effect 15 months after its adoption, or from Jan. 1, 2024, depending on which comes later.
Unlike the EU Copyright Directive, EU member states are not required to transpose the terms of the bills into their own national law, leading to different interpretations of how the law applies. Instead, all 27 EU countries are required to implement the legislation as it is written in the final EU text.
