New Guidance for Agencies on the EU Digital Services Act and EU Digital Markets Act

Two major EU pieces of legislation currently before the European Parliament and European Council are expected to shake up the digital landscape. While both laws still require a formal vote and a finalization of legal language, both laws are expected to pass given the broad political agreement reached among EU members.

Agencies should review the 4As latest guidance document on the Digital Service Act and Digital Markets Act to assess how their business and clients online advertising strategies might be impacted.

EU Digital Services Act + EU Digital Markets Act – Agency POV

• The Digital Services Act (DSA) is intended to combat misinformation, explain to users and researchers how their algorithms work, and stop targeting online ads based on a person’s ethnicity, religion or sexual orientation. Minors cannot be subject to targeted advertising either. Dark patterns will be banned. Companies face fines of up to 6 percent of their annual turnover for noncompliance. DSA rules will apply to all companies 15 months after the DSA is voted into law, or from January 1, 2024, whichever is later.

• The Digital Markets Act was created by regulators to address what they perceive as competition issues by the biggest online platforms, including their dominance over app stores, online advertising and internet shopping. Covered entities could face fines of up to 10 percent of their total worldwide turnover (for the preceding year) if they fail to comply with the legislation. The DMA has expected enforcement beginning in spring 2023.

Although both policies only apply to EU citizens, the effect of these laws will certainly be felt in other parts of the world. Global tech companies may decide it is more cost-effective to implement the EU’s comparatively stringent regulations as their benchmark for other global markets.

For questions about the DSA or DMA, please contact Alison Pepper.