Digital Services Act Set to Become Law
Also — Von der Leyen in India • Russia Sanctions, Oil & Gas • Elections in France and Slovenia
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Final Agreement on the EU’s Digital Services Act
It’s a deal ! The last trilogue on the Digital Services Act (DSA) was held last Friday and an agreement has eventually been reached after 16 hours of negotiations, following some last-minute changes regarding the wording over the liability for online search engines.
TIMEFRAME • The DSA, a “world first in the field of digital regulation”, will need to be finalised on a technical level before the Parliament and the Council give their formal consent and officially publish it. In any case, these new rules are expected to enter into force in the first trimester of 2024. “However, a number of important details still remain to be clarified. We hope that the final legislation will allow all companies, both large and small, to comply with the rules in practice, enabling Europeans to continue to enjoy the many benefits of digital services”, said Victoria de Poson from the Consumer and Computer Industry Association, a lobby group.
PURPOSE • The DSA aims to regulate online platforms and addresses both consumer protection and privacy matters. It seeks to update the legislation to reflect the emergence, over the past twenty years, of big platforms that have significant impacts on society. The DSA sets standards for a safer and more open digital space for users.
Since the proposition phase, the mantra guiding the construction of the legislation has been “everything that is illegal offline, should be illegal online”. With this final agreement, Margrethe Vestager considers it is no longer just a slogan but that this principle is finally materialised in this text.
KEY ELEMENTS • The DSA will apply to all online intermediaries providing digital services in the EU such as social media or marketplaces for instance. However, obligations will be more stringent when the intermediary is considered as a “very large platform” — so as to shield start-ups and small enterprises from a potentially stifling regulation for SMEs.
The main issues of the DSA relate to content moderation and marketplace rules, targeted advertising, prohibition of dark patterns and crisis mechanisms. Amongst these provisions, intermediary services will have to grant the Commission access to their algorithms, be subject to a “notice and take down” obligation regarding illegal content online as well as transparency obligation towards users for recommender systems.
Very large platforms will also have to assess and mitigate systemic risks they create through yearly audits. In the event of crises, the Commission will have the power to directly intervene to curb disinformation.
Last but not least, sanctions in the event of breaches of the DSA go up to 6% of the company’s global annual turnover.
BRUSSELS EFFECT • With this new step, both the DSA and its sister legislation, the DMA give the EU unprecedented power to achieve a new European model of digital regulation. Being a first mover with these landmark pieces of legislation, the EU flexes its regulatory muscle and hopes that other countries will follow suit — a phenomenon dubbed the ‘Brussels effect’ by legal scholar Anu Bradford. The EU’s 2018 landmark privacy legislation — the GDPR — was emulated by countries such as Brazil or Japan. Taming the ‘digital wild west’ on the Old Continent puts pressure on the US, where several pieces of legislation are being discussed to curb the power of Big Tech.
EU Mulls Over New Sanctions Package, Amidst Heated Debate on Russian Oil & Gas Ban
As the EU is set to announce a sixth package of sanctions, the debate is still hot on whether and how to cut the bloc of 27 countries off from Russian energy. Agreeing to a gradual embargo on Russian gas will prove more tricky than on oil — given the supply chain hurdles and the dependency of several Member States.
SANCTIONS LATEST • On 21 April, the Council adopted new restrictive measures against two businessmen for their involvement in the illegal annexation of Crimea and the destabilisation of eastern Ukraine. One of them, Yevgeniy Viktorovich Prigozhin, is the founder and unofficial head of the Wagner Group, a Russia-based unincorporated military entity, responsible for the deployment of Wagner Group mercenaries in Ukraine. EU restrictive measures imposed following the war in Ukraine currently apply to a total of 1,093 persons and 80 entities.
OIL & GAS • While EU Member States are considering an embargo on Russian oil, the economic implications of such a move make this choice a difficult one. The US is cautioning the EU about a full-blown embargo. US Treasury Secretary Janet Yellen warned that a total ban on oil imports may not have such a negative impact as hoped for because Russia will benefit from a surge in prices even if it exports less.
HOUSE DIVIDED • In an interview with several newspapers of the Leading European Newspaper Alliance (LENA) on 22 April, High Representative for Foreign Affairs Josep Borrell said: "An import stop for oil and gas or a punitive tariff would be important to put pressure on Putin and bring him to the negotiating table (...) but at the moment we in the EU do not have a unified position on this question”. Relectuant Member States include Germany, Austria, but also Hungary — whose Prime Minister Victor Orban has recently said he would veto any form of EU embargo.
GERMANY • Olaf Scholz might well end up succeeding the iron chancellor Otto von Bismarck as the oil chancellor — although Gerhard Schröder probably has a bigger claim on the title. Germany is still opposing a full embargo. MEPs from across the political spectrum have also sent a letter to Germany’s Prime Minister Olaf Scholz, calling on him to “overcome the current political impasse and immediately implement the Russian energy embargo”. However, Foreign Minister Annalena Baerbock pressed that: "oil imports will be halved by the summer and will be at zero by the end of the year."
The Bundesbank warned last Friday in its latest monthly bulletin that an immediate EU ban on Russian gas would dent German GDP by 5 per cent in 2022, triggering a surge in energy prices and one of the deepest recessions of recent decades. In these circumstances, the EU seems to favour a gradual ban on Russian oil which would allow the EU to find alternatives.
NEXT EUROPEAN COUNCIL • Due to the high sensitivity of the question, a potential fully-fledged ban on Russian oil and gas imports will be discussed among the leaders of Member States during the special meeting of the European Council on 30 and 31 May. The sixth package of sanctions for Russia will be presented to Member States this week.
Von der Leyen in India in Move to Bolster EU-India Ties
European Commission President Ursula von der Leyen is on an official visit to India on 24-25 April to mark the 60th anniversary of EU-India ties. President von der Leyen is chief guest of the Raisina Dialogue, a multilateral conference hosted by India’s Ministry of Foreign Affairs. Indian Prime Minister Modi is set to visit Germany, Denmark, and France in early May.
TRADE • The visit by the EU’s executive arm top official is aimed at deepening trade talks with India, which started in 2013. Brussels hopes to make progress on this front, which is part of a broader effort to mitigate the effects of economic decoupling with Russia. “I am also glad that we are starting negotiations towards comprehensive trade and investment agreements”, Von der Leyen said. A delegation from India visited Brussels earlier this month, a sign that war in Ukraine has accelerated trade talks.
“[For] the European Union, the partnership with this region is one of our most important relationships for the coming decade, and strengthening this partnership is a priority for the European Union. Our strategic cooperation should take place at the nexus of trade, trusted technology, and security, notably in respect of challenges posed by rival governance models” — Ursula von der Leyen, 25 April 2022
RUSSIA • The EU and India are somewhat at odds over Russia. Moscow has close ties with New Delhi in defence — as India relies on Russian weapons and technology imports. Prime Minister Modi has noticeably not condemned Russia’s war in Ukraine and struck a deal with Russia to import crude oil at a discount.
“To many non-India experts in Europe, India’s voting record in the UN General Assembly and UN Security Council was met with raised eyebrows. Just as New Delhi was surprised by the actual invasion, policy makers in Europe were surprised by the absent Indian condemnation of Russia’s invasion”, writes Axel Nordenstam from the Swedish Institute of International Affairs.
CHINA • The EU-China Comprehensive Agreement on Investment (CAI) stalled after the EU imposed sanctions on officials linked to Xinjiang in 2021. China retaliated with sanctions, including on Reinhard Bütikofer, the chair of the European Parliament’s delegation for relations with China.
Soon after, in May 2021, the EU leaders met with Prime Minister Modi at an EU-India Leader’s meeting in Porto to resume talks on a free-trade agreement. Also in 2021, the EU’s Indo-Pacific Strategy was seen as another way for the EU to pivot away from China.
All these trends are made all the more acute with China’s ‘pro-Russian neutrality’ in the Ukraine war. EU officials are careful not to put India’s “real abstention” in the same bag as China’s, the EU’s special envoy on the Indo-Pacific Gabriele Visentin told The Hindu in late March.
So far, “New Delhi has seen a spate of visits from European officials but the tone has not been lecturing”, writes Garima Moha, a fellow at the German Marshall Fund of the US.
CLIMATE & WAR • During her speech at the International Solar Alliance in New Delhi, von der Leyen stressed made the link between the EU and India’s climate goals — reaching net zero emissions in 2050 and 2070, respectively — and energy ties with Russia. “Our transition to home-grown renewable energy is not only good for the environment, but it also becomes a strategic investment in security”, von der Leyen said.
TRADE & TECHNOLOGY COUNCIL • Von der Leyen announced the creation of a EU-India Trade and Technology Council (TTC), on the same model as the EU-US TTC. The Trade and Technology Council is a high-level discussion forum to even out differences on critical topics, from 5G to privacy. The next meeting of the EU-US TTC will take place on 15-16 May in France.
France Re-Elects Macron; Slovenia’s Prime Minister Suffers Major Political Upset
FRANCE • French President Emmanuel Macron pledged to reunite a deeply-divided country after winning a second term in office yesterday. Macron won with 58.5% of the votes, compared to far-right Marine Le Pen’s record high 41.5%. These results come after a historic first round two weeks ago, which saw traditional parties plummet, far-left Jean-Luc Mélenchon come third with 21.95% of the vote share and Le Pen receiving the highest number of votes in her party’s history. Macron acknowledged that many voters had only cast their second-round vote in his favour to block the far-right: ‘restor[ing] French unity” is now Macron’s urgent next step, according to Finance Minister Bruno Le Maire.
Macron’s election signals stability on the EU scene, as France presides over the Council of the EU until 30 June. Le Pen had vowed to veto future sanctions against Russia, and sought to make Putin a “strategic ally” following the end of the war in Ukraine – leading major EU figures to publish a column in the French paper Le Monde to call for a Macron vote. In a tweet last night, Commission President Ursula von der Leyen congratulated Emmanuel Macron, looking forward to continuing their “excellent cooperation”.
SLOVENIA • Slovenia went through a political upset last night, with populist right-wing Primer Minister Janez Janša suffering a major defeat in parliamentary elections. The left-leaning Freedom Movement, which was only formed last year, secured one third of the votes – and, with the support of the Social Democratic Party, is expected to form a majority in parliament against the PM’s Slovenian Democratic Party (SDS).
Janša, a close ally of Vladimir Putin and Hungary’s Viktor Orbán, got to power in March 2020 – marking the start of a decline in democratic standards in Slovenia, according to Freedom House’s country report. The NGO notes that “the current right-wing government has made continued attempts to undermine the rule of law and democratic institutions, including the media and judiciary”.
What we’ve been reading this week
To become stronger, Europe should seek more and closer friends, explain Vanika Sharma and Renata Zilli for the ECIPE. Luckily, they have come across a formula that does the job, using one of the Union’s strongest suit: trade.
Over at the CER, Megan Ferrando has another idea which may have the same effects: helping states of the Maghreb improve water security.
After years of assiduously courting the favours of Central and Eastern European countries, China may have reasons to feel frustrated for not getting much support in return. No wonder, writes Ivana Karásková for MERICS: not only have the economic boons of cooperation with China partly failed to materialise, but the Asian giant’s backing of Moscow has caused alarm among Russia’s neighbours.
The ECFR’s Arturo Varvelli makes the case for a new European energy union.
This week’s newsletter is brought to you by Thomas Harbor, Charlotte Véron, Nathan Munch, Andreea Florea, Maxence de La Rochère, and Théo Bourgery. See you next Tuesday !
* Oh by the way, the views expressed in this publication do not reflect the views of those credited.