Amid growing geopolitical tensions, the European Union finds itself at the precipice of a new era of securing sovereignty on the global stage: it must become a technology leader, manage supply shocks, stand up for its values, act in security and defense policies – all this while promoting multilateralism and partnerships.

These challenges become even more prevalent in the digital space. With the DSA and the DMA, two digital legislations were recently agreed on that will shape the online environment in the EU and beyond for the coming decades. We show how impactful interrelations between both Digital Acts and different notions of digital sovereignty have become in discourses and policymaking in recent times.

The pursuit of a digital sovereign Union

The impact of non-EU tech companies on the EU’s digital economy and innovation potential, on EU privacy and data protection, and on establishing a secure and safe online environment for European digital users is ever more concerning EU policymakers.

Moreover, given the growing tensions concerning China’s technological presence in the EU and Russia’s prevalent cybersecurity threats, the EU has intensified to verbalize its intention to promote digital sovereignty.

Against this background, a new urgency has been given to a question that has already been discussed intensively among EU policymakers in past years: How can Europe promote its sovereignty in a way that it is resilient to outside political and economic pressures while standing up for its own values and interests globally?

Especially in the digital sphere, this question of sovereignty is becoming ever more relevant. This is why ambitions to work towards digital sovereignty have been identified as a key challenge by the European Commission for the EU’s “Digital Decade” (2020 to 2030).

The EU’s digital agenda is deeply linked to Europe’s role in the world, as technology plays a crucial role in the broader geopolitical shifts that are currently underway.

We are now taking a closer look at the Digital Services Act (DSA) and the Digital Markets Act (DMA), adopted recently by the EU as two central pillars of the EU’s digital strategy, to better understand the interrelatedness between the ambitious digital twin regulations and digital sovereignty.

Digital sovereignty and the EU’s digital twin regulations

Every policy is a prediction – and digital sovereignty is currently an essential predictor for digital policy measures. This is no different with the DSA and the DMA.

In mutual reinforcement, the two set out a new rule book for actors in the European Union that aims to improve users’ rights and business competitiveness in the digital space.

These rules will likely also be impactful beyond EU borders. Many aspects of digital sovereignty – capabilities of states, individual rights, competitive businesses – are at the legislation’s core.

DSA and DMA: Which problems do they tackle?

The European Commission published proposals for both acts in December 2020. Political agreements were reached on March 25, 2022 (Digital Markets Act) and on April 23, 2022 (Digital Services Act), with the European Parliament voting on their adoption on July 5, 2022.

Now, both will come into force after being published in the Official Journal of the European Union. The DSA will apply fifteen months after its official publication or at the latest in January 2024, while the DMA will apply six months after the DSA comes into force.

By imposing measures with more substantial obligations for very large online platforms – the majority of which are either US or Chinese owned, the DSA builds on the E-Commerce Directive from 2000. With its implementation, the EU pursues and strengthens its value-driven approach to the digital realm, taking aim at three core aspects:

  • Protect citizens from increased risks and harms they are exposed to on social networks (e.g., hate speech and disinformation), especially with concern to large online platforms as they are most impactful (in terms of number of users).
  • Supervise online platforms in a coordinated and effective fashion within the EU.
  • Remove barriers for trade in digital services within the EU’s internal market and fostering competitiveness for small- and medium-sized enterprises, which are currently experiencing a comparative disadvantage vis a vis very gatekeeper platforms.

Whereas the DSA targets services, such as ads, content moderation and access to platforms, the DMA defines the market environment, enforcing stronger requirements and limiting space for so-called gatekeeper platforms.

Obligations and mechanisms in the DMA are a designed to adress the existing dysfunctionality in digital markets and offer solutions to:

  • Increase contestability and competition in platform markets.
  • Enhance fairness for business practices vis-à-vis business users in platform markets.
  • Unify fragmented regulation and oversight of players in platform markets.

Unified in substance, divided by definition: What is European digital sovereignty?

While broad agreement among EU policymakers about the necessity of promoting digital sovereignty for Europe exists, there is no consensus on how to define the term unitarily.

“Digital sovereignty has been used interchangeably with “technological sovereignty” as the term’s connotation used to be characterized by an economic view that referred to dependencies of the EU on technologies produced outside the Union as well as a lack of production capacities and R&D investments.

Many of these aspects are also interlinked with cybersecurity concerns, particularly pertaining to critical technological infrastructure and the vulnerability of data storage. Another viewpoint builds on the individual perspective and emphasizes the importance of strengthening individual rights such as privacy in the online environment.

Digital sovereignty has been used to describe a range of meanings related to concentrated business power in the global platform sector to the EU’s capabilities of technology and innovation potential, to protecting rights and values of the European Union and its citizens in the digital space.

The interrelations of DSA and DMA: Contributing to European digital sovereignty

Both digital legislations contribute to European resilience and capabilities to act in a broader sense. A closer assessment of the DSA and DMA reveals three key elements influence of digital sovereignty on the DSA and DMA – and vice versa.

  1. Establishing the European Union as a global driver for digital policies
    Neither DSA nor DMA are the first examples of the EU’s role as an international vanguard for policy measures (e.g., GDPR). However, the effect of demonstrating the EU’s capability of effectively establishing digital laws can only be successful if both pieces of legislation are enforced in the member states – a long and rocky road.
  2. Promoting European values and citizens rights in the digital age
    The DSA is on security for citizens as users of digital technology, and its emphasis is on protecting European values and norms as rights of its citizens in the digital realm. This implies not only ensuring a safer online environment for users through combating disinformation and hate speech but also promoting access and interoperability in a broader sense (e.g., through the promotion of “Open Source” standards). This approach is very much in line with the EU Declaration of Digital Rights and Principles, proposed by the Commission in January. Still, the EU Commission will need to continue to assess the effectiveness of the DSA to address any policy goals that are not adequately targeted yet.
  3. Strengthening the European digital economy
    By increasing competitiveness of small and medium-sized European (digital) companies vis a vis very large platforms, the DSA and DMA can potentially contribute to strengthening the European Digital Single Market. While reaching complete economic independence in digital markets is neither realistic nor admirable, both the DSA and DMA intend to strengthen the economic resilience of EU member states. Companies from third countries will need to comply with EU-specific rules for upholding market access. On the downside, rising compliance costs can also come with higher prices and companies exiting the European Digital Single Market, leaving consumers fewer choices.

Caught up between protectionism and multilateralism: A balancing act

Looking at the mutual impact of the DSA and DMA and the concept of digital sovereignty shows that both digital legislations contribute in different ways and jointly to digital sovereignty. The wide range of interpretation of digital sovereignty makes it difficult to come up with one clear-cut definition and to explain its multiple uses in the political discourse.

It is remarkable that such a fuzzy term can be so impactful. At the same time, this is not without risk: missing an unambiguous meaning of digital sovereignty can come at the cost of justifying a broad range of measures by simply relying on the term’s vagueness.

The fact that many aspects of digital sovereignty can be found in the DSA and DMA underlines how impactful the term already is in the discourse as well as for political decision-making, thus leveraging the so-called “Brussels effect“.

It is likely that the EU will externalize at least some aspects of its digital legislation to other markets when third country companies adjust their services to comply with EU rules to continue to access the European Digital Single Market – most importantly to its consumers.

Digital sovereignty does not stop at shades of (cyber) security but goes well beyond and is meaningful for the EU’s political state capacities, its citizens, and its economy.

As these pieces of legislation are to be enforced, the balance between promoting European digital sovereignty and maintaining a multilateralism approach and international cooperation will be tough. Growing tensions with Russia and China and strong EU-US dependence in the digital sector point the way ahead towards stronger transatlantic cooperation in digital development and democratic technologies.

The EU-initiated Transatlantic Trade and Technology Council (TTC) launched in September 2021, is working to expand areas for EU-US collaboration. Efforts in this direction have already been undertaken.

A digital sovereign European Union should not aim to become a lone digital island, but rather part of a strong alliance of countries joining forces to make the best use of digitalization for the future of our democracies.

About the authors

Charlotte Freihse is a project manager within the Junior Professionals Program of the Bertelsmann Stiftung. Under the theme of the program, “Digitalized Society”, she works successively on the projects Democracy and Participation in EuropeEthics of Algorithms, and Europe’s Future.

Markus Overdiek works for the “Europe’s Future” program at the Bertelsmann Stiftung. Previously, he worked for the Bertelsmann Stiftung on the projects “Ethics of Algorithms” and “Global Economic Dynamics”. He has a focus in economics, data science, digitization, and European affairs.

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