On May 2020, Executive Vice President and Commissioner for Digital, Margrethe Vestager, followed the invitation of the Committee on the Internal Market and Consumer Protection (IMCO) for an exchange of views. Issues included among other the EU’s reaction to the COVID-19 crisis, a European recovery strategy and the updated Work Programme of the EU Commission. However, the planned Digital Services Act as well the revision of the Directive on electronic commerce associated with it and the initiative on the ex-ante regulation of digital platforms were a key subject.

Digital services

As Vestager pointed out in her opening statement, the COVID-19 crisis had especially forced small and medium-sized enterprises (SME) to become digital businesses quasi overnight. This was another reason why the Commission was intensively working on the Digital Services Act: here too a clear legal framework was required. With a view to reforming the Directive on electronic commerce one had to strive for consumers having the same trust in online purchase as they have in offline purchases. Vestager recognised many approaches and ideas in the Draft report of the responsible Rapporteur MEP Alex Agius Saliba (S&D), which were shared by the Commission. Asked by Agius Saliba about the revision of the Directive on electronic commerce, Vestager named the country-of-origin principle as a significant factor. With regard to future ex-ante regulations of platforms, so-called gatekeepers – hence, regulating and controlling actors that significantly influence the internet (for example by controlling information) – shall be obliged to guarantee fair (competitive) conditions. According to Vestager a fair and functioning online market, which benefited consumers, had to be ensured.

Initiative Report of the European Parliament

Subsequently, Agius Saliba reported to the Committee. The current situation would illustrate the importance of digital services even more. These would enable many businesses to continue also during the lockdown. However, the COVID-19 crisis would also demonstrate the risk of online trading. Like the Chamber of Labour, Agius Saliba confirms in his report that consumers are not sufficiently protected against the sale of counterfeit or illegal products as well as against unjustifiably and inappropriately increased prices. He emphasised that a Digital Services Act package had to comprise two points: Firstly, the Directive on electronic commerce – it originates from 2000 – had to be completely revised. However, certain fundamental principles were still relevant after 20 years and had to be retained, such as the so-called Internal Market Clause, the freedom of establishment and the ban on imposing a general obligation to monitor. Secondly, a legal instrument for the internal market was required, which would impose ex-ante obligations on large platforms, which act as gatekeepers. These obligations should be supplemented by an effective institutional enforcement mechanism. Apart from that, the validity of the new legal act should include all digital services, to which no special provisions of law apply, and should also be extended to the activities of companies and service providers with seat in third countries. According to Agius Saliba it had to be unmistakably clarified that matters, which are illegal offline are also illegal online.

Chamber of Labour for the protection of consumers

Safeguarding and developing the level of consumer protection is a particular concern of the Chamber of Labour. The needs of consumers concerning the present protection against non-transparency, misleading, deception and fraud on the internet have to be sufficiently taken into account within the scope of a Digital Services Act. Transparency provisions for rankings on all platforms and a unified regulation of online advertising were urgently required. The ”platform-to-business” Regulation should not only protect third party providers on online market places against non-transparency and discrimination; it was also important that consumers would benefit from this protection as well. Platforms with gatekeeper function need provisions to conform with the principle of net neutrality. In view of increasing cybercrimes on internet platforms it was also necessary – in cooperation with the responsible criminal justice authorities – to develop codes of conduct, which effectively guard against consumers being harmed. The staged liability of internet operators has to be retained and the so-called “Notice and Takedown” procedure has to be more specifically regulated to prevent platforms to delete to much contents under pressure.

Further information:

AK EUROPA: Initiative Report of the European Parliament on the Digital Services Act

AK EUROPA: The COVID-19 crisis as an accelerator for Digitalization

AK EUROPA: Fair minimum wages in the age of platformization