In 2020, the European Commission implemented new rules known as the Digital Services Act and Digital Markets Act, which completely changed the game on the eCommerce landscape.
With more than 10,000 online businesses in the EU, most are small and medium-sized businesses that experience tough competition.
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Those eCommerce stores that don’t comply with the new rules may lose up to 10% of their annual revenue or even be banned.
However, those rules give a boost to small businesses that experienced hardship competing with giant players.
In this article, we’ll get into details of DSA and DMA and how you should update the platform to comply with them. Let’s get started!
What Are DSA And DMA?
The last couple of years have been known for the rise of cybercrime that affected thousands of people.
At first, the community didn’t know how to react to it, but recently we’ve seen the rise of protection measures, such as banning inappropriate content and preventing counterfeit goods, etc.
The General Data Protection Regulation that was implemented in 2018 was one of the pillar acts of ensuring data protection.
Its main purpose was to create clear guidelines regarding collecting, preserving, and processing EU and EEA data.
However, when the Act became effective, there were a lot of misunderstandings on how to apply those rules and how they would impact the platforms
Meanwhile, DSA and DMA will soon require new reforms and improvements of platforms.
The Digital Services Act (DSA) is developed to prevent the spread of potentially harmful online content and the sale of illegal products and services. Additionally, DSA requires fair and clear conditions for every business.
Benefits Of DSA And DMA
With the right implementation, the Digital Services Act and Digital Markets Act benefit everyone involved in the process:
Consumers
The main purpose of both acts is to ensure that users aren’t exposed to harmful content, such as hate speech or sexual abuse materials, extreme political content, or purchasing illegal products.
Besides, more than 80% of Internet users say that their freedom of expression is violated after owners of the websites choose to eliminate content without previous warnings and explanations.
- With the new rules, the customers get to:
- wider variety of products and services at lower prices
- send warnings about the illegal content so it can be removed at once
- access the relevant content, not only that on the prepaid ads
- be sure that their rights are protected
Business
Before implementing the new rules, businesses couldn’t access the data about their listings and advertisements.
In this way, unfair competition arose because platform owners chose to rank higher those who paid more or attracted more traffic. In fact, 88% of businesses faced unfair competition while working with large platforms.
Meanwhile, the new rules allow those businesses to have the following:
- More options when it comes to platforms and equal advertising options for all the sellers
- easier access to marketplaces within the EU
- stronger protections against illegal goods
- Platforms that have clear and fair internal processes, from access to sales data to improved communication channels with customers
Those measures will eventually lead to increased competition, more innovative solutions, expansion of foreign sales, and improved quality of service
Platform Owners
Just a decade ago, new marketplaces had zero chances to succeed in highly competitive industries because all of them were controlled by a couple of large companies.
And there were no regulations in place to control the situation. With the new rules, the platform owners get the following:
- fair rules and conditions for every platform, no matter their size, throughout the EU
- ability to start businesses and expand in a more amicable environment for the European marketplaces
What Should You Do To Comply With DSA And DMA?
Those new rules will affect platforms like online marketplaces, social media platforms, online stores, travel websites, etc., within the EU territories.
Their requirements depend on the size of the business. For example, small and medium-sized businesses have to:
- Provide clear reporting
- Make users’ rights their top priority
- Cooperate with local authorities
- Ensure quick and easy access to platform administration
- Give customers the information they request
- Provide a guideline for registering and handling complaints out of court
- Give users the necessary tools to spot illegal content, products, or services
- Take action against abusive material
- Ensuring that third-party suppliers are legit
- Working on transparent online ads
- Report criminal offenses immediately
If the platform covers more than 10% of the EU’s population, it will need to provide regular risk assessment and enhance its crisis management procedures.
Meanwhile, those marketplaces that are considered gatekeepers will need to do the following:
- They cannot rank their services over other services unfairly
- They cannot forbid or interfere with users communicating with businesses outside the platform
- They need to provide tools for the advertisement of the goods and services to every business
- They need to get permission from the EC to be able to get acquisitions and mergers in advance
- They cannot forbid users to work with pre-installed applications and/or software
Final Thoughts
With the Digital Services Act and Digital Markets Act, the eCommerce landscape changes significantly.
For now, it’s too early to say whether those new standards will be successful in the long run.
These new regulations are still being discussed, and there are a lot to be changed. At the same time, it’s never too early to prepare for those changes.
If you are a small business, it’s only wise to include the DSA requirements in your to-do list and incorporate the necessary changes into your business.
In case you already have an established business, it’s necessary to review all the existing terms and conditions to ensure that they comply with the requirements and are fair to all the involved parties.
Besides, you need to make sure that no illegal or abusive content is sold through your platform.
