New Digital Economy Act

The online environment in the Czech Republic is about to undergo a significant transformation with the introduction of the draft Digital Economy Act. This legislation, recently approved by the government, aims to establish a clear and fair regulatory framework for digital platforms, ensuring that users and smaller businesses are protected, competition is encouraged, and innovation is fostered.

1. Key Objectives and Provisions 

The Digital Economy Act aims to address the challenges posed by the rapid growth of the digital market. It introduces comprehensive rules covering a range of activities, including the operation of online marketplaces, social networks, cloud services, internet connection providers, search engines, and intermediary or hosting services. Its goal is to strengthen the protection and security of users in the online environment and to ensure that users' data is managed securely. 

It prepares the Czech Republic for the adaptation of several European Union regulations, such as those aimed at protecting minors from targeted advertising. It also prohibits targeted advertising based on sensitive personal data, such as health, religious beliefs or racial origin.

One of the key provisions of the legislation is its approach to illegal content, based on the principle from the EU's Digital Services Directive that "what is illegal offline must also be illegal online". This includes allowing users to report illegal content through a formal, duly substantiated notice, to which service providers must respond and, where appropriate, remove it.

To prevent monopolistic practices, the Act introduces rules that vary based on the size of the company. This proportional approach ensures that smaller businesses are safeguarded, fostering a competitive and innovative digital market.

2. Oversight and Enforcement

 The Czech Telecommunications Office is the regulatory authority responsible for overseeing and enforcing the Act. In matters of personal data protection, this role falls to the Office for Personal Data Protection. These bodies should ensure compliance and dealing with any breaches of the law.

The Act sets out stringent penalties for non-compliance. Companies that violate the law may be fined up to CZK 10 million or 6% of their worldwide net turnover. In serious cases, companies could also be banned from operating on the digital market.

3. A Dynamic and Evolving Framework

The Digital Economy Act is not a one-time fix but a dynamic framework expected to evolve alongside the digital landscape. As new European Union regulations emerge, the Act will likely undergo revisions to stay relevant and effective. Adaptability will be key to maintaining a regulatory environment that meets the demands of the fast-paced digital economy. The Digital Economy Act is expected to enter into force during 2025.

By Mgr. Bc. Karolína Szturc

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