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Digital Services Act, European Added Value Assessment Digital services act European added value assessment STUDY EPRS | European Parliamentary Research Service Authors: Niombo Lomba and Tatjana Evas European Added Value Unit PE 654.180 – October 2020 EN Digital services act European added value assessment This European added value assessment (EAVA) analyses the potential added value that could be achieved by enhancing the current EU regulatory framework on digital services. The scope of the EAVA includes an analysis of the e-Commerce Directive and more broadly of commercial and civil law rules applicable to commercial entities operating online. Based on the comparative legal analysis, the assessment identifies 22 main gaps and risks that currently affect provision of online services in the EU and proposes policy solutions to address these shortcomings. In order to assess the European added value (EAV) quantitatively and qualitatively, the gaps and policy solutions identified are clustered into four policy packages: consumer protection measures, action on content management and curation, measures to facilitate competition in online platform ecosystems, and actions to enhance enforcement and legal coherence. The results of the macroeconomic-modelling, for two of the four policy packages, suggests that taking common EU action to enhance consumer protection and common e-commerce rules, as well as to create a framework for content management and curation that guarantees business competitiveness and protection of rights and freedoms, would potentially add at least €76 billion to EU gross domestic product between 2020 and 2030. This quantitative estimate provides a lower boundary for direct economic impacts, and does not quantify or monetise the EAV of qualitative criteria, such as consumer protection, coherence of the legal system or fundamental rights. Therefore, the overall European added value of improving the functioning of the single market and adapting commercial and civil law rules for commercial entities operating online, as indicated by qualitative analysis, would be considerably higher. EPRS | European Parliamentary Research Service AUTHORS Niombo Lomba and Dr Tatjana Evas (Chapter 3), European Added Value Unit, DG EPRS. This paper has been drawn up by the European Added Value Unit of the Directorate for Impact Assessment and European Added Value, within the Directorate-General for Parliamentary Research Services (EPRS) of the Secretariat of the European Parliament. The first annexed research paper on a quantitative assessment of the European added value of the digital services act has been written by Carlota Tarin, Juan Pablo Villar, Julio Blázquez Soria (Iclaves S.L.) Cornelia Suta, Unnada Chewpreecha, Bence Kiss-Dobronyi, Anthony Barker (Cambridge Econometrics BV). The second annexed research paper on the Digital services act: Adapting commercial and civil law rules for commercial entities operating online: legal assessment, has been written by Prof. Gerald Spindler (University of Goettingen/Germany). The third annexed research paper on the Digital services act: Improving the functioning of the single market, has been written by Prof. Jan Bernd Nordemann (Humboldt University Berlin and law firm NORDEMANN) with the support of Dr Julian Waiblinger (University of Potsdam and the law firm NORDEMANN), all three at the request of the European Added Value Unit (EPRS). To contact the authors, please email: [email protected] LINGUISTIC VERSIONS Original: EN Manuscript completed in September 2020. DISCLAIMER AND COPYRIGHT This document is prepared for, and addressed to, the Members and staff of the European Parliament as background material to assist them in their parliamentary work. The content of the document is the sole responsibility of its author(s) and any opinions expressed herein should not be taken to represent an official position of the Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy. Brussels © European Union, 2020. PE 654.180 ISBN: 978-92-846-7158-8 DOI: 10.2861/7952 CAT: QA-02-20-760-EN-N [email protected] http://www.eprs.ep.parl.union.eu (intranet) http://www.europarl.europa.eu/thinktank (internet) http://epthinktank.eu (blog) Digital services act Executive summary Background E-commerce has become an indispensable feature both of the economy, particularly for the services sector, and of consumers' shopping habits. It helps EU citizens to access services more easily and quickly and businesses to reach customers in a more targeted and direct way. The legal framework provided by the e-Commerce Directive – set up 20 years ago – has been an important pillar for digital services. However, despite the success story of the e-Commerce Directive, the need to amend the current regulation is now widely accepted – in both private and public sectors, by consumers and fundamental rights organisations, and is part of debates around technology and science. Concerns range from the need to do more to protect social and fundamental rights, strengthen consumer trust and foster a level playing field for European services. The current coronavirus pandemic has meanwhile highlighted the benefits and downsides of e-commerce still further. Why should the EU act? There is a clear need for action at EU level.The existing legal framework, as discussed in Chapter 3, has a number of gaps and risks that negatively impact provision of digital services in the internal market. These issues include: fragmentation of national regulation within the EU; weak enforcement and cooperation between Member States; differing Member State rules on protection of consumers and businesses using digital services; and market entry barriers. Moreover, the work of balancing fundamental rights and principles with the freedoms of the single market is often left to the national courts, again leading to differentiated, fragmented solutions. The European Parliament can ask the European Commission to take legislative action (Article 225 of the Treaty on the Functioning of the European Union, TFEU). To this end, Parliament adopts legislative-initiative reports (INL), which are accompanied by a European added value assessment (EAVA). This specific EAVA analyses the added value to be achieved through a digital services act introduced at EU level. It supports the legislative-initiative reports (INL) of the European Parliament on (i) the Digital services act: Adapting commercial and civil law rules for commercial entities operating online (2020/2019(INL)) and (ii) the Digital services act: Improving the functioning of the single market (2020/2018(INL)) prepared by (i) the Legal Affairs Committee (JURI) and (ii) the Committee on the Internal Market and Consumer Protection (IMCO). For the legal and economic evaluation, three external studies were commissioned. Those can be found as annexes to this paper. Scope of the assessment The scope of the EAVA includes an analysis of the e-Commerce Directive (ECD) and more broadly of commercial and civil law rules applicable to commercial entities operating online. On the basis of the comparative legal analysis, the assessment identifies gaps and risks currently affecting provision of online services in the EU and proposes policy solutions to address these shortcomings. In order to assess the European added value (EAV) quantitatively and qualitatively, the gaps and policy solutions identified based on the legal analysis are clustered into four policy packages: consumer protection measures, action on content management and curation, measures to facilitate competition in online platform ecosystems, and actions to enhance enforcement and legal coherence (see Table 1 below). I EPRS | European Parliamentary Research Service Table 1 – Summary of policy options and policy actions identified Policy package Policy actions* 1. Fair and transparent contract terms and general conditions for business partners and consumers. 2. Reinforced minimum information requirements for Enhanced consumer protection commercial communications. 1 and common e-commerce rules 3. Increased transparency of commercial communications. 4. Extension of scope of the ECD to service providers from non- EU countries. 5. Limitations on intrusiveness of advertising. 1. Clear** and standardised notice-and-action procedures to Creation of a framework for deal with illegal and harmful content. content management and 2. Enhanced transparency on content curation and reporting 2 curation that guarantees the obligations for platforms. protection of rights and freedoms 3. Out-of-court dispute settlement on content management, particularly on notice-and actions procedures. 1. New horizontal rules in the Platform to Business Regulation for all digital platforms. Specific regulation to ensure fair 2. Creation of a specialised body to reinforce oversight of 3 competition in online platform the behaviour of systemic platforms. ecosystems 3. Creation of specific ex ante rules that would apply only to systemic platforms to ban or restrict certain unfair business practices. 1 Clarification of key definitions. Cross-cutting policies to ensure 2 Clarification of liability exemptions for online intermediaries. 4 enforcement and guarantee 3 Establishment of transparency and explainability standards clarity and procedures for algorithms. 4 Measures to ensure enforcement. Source: Based on Annex I. Note: * Annex I includes a more detailed explanation of the policy actions. ** 'Clear' in this
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