EU Digital Strategy : A Comprehensive Harmonization of the Digital Single Market
The European Union (EU) has decla­red the « digi­tal decade » and has esta­bli­shed itself as a regu­la­tory powe­rhouse, leading the way in digi­tal gover­nance. The EU digi­tal stra­tegy aims to harmo­nize the digi­tal single market, invol­ving over 30 legis­la­tive measures, action plans, and initia­tives. Many of these are also adop­ted in the European Economic Area (EEA). Key regu­la­tions include :

• Artificial Intelligence Act (AI Act): Governing the use of AI to ensure it is human-centred and trustworthy ;
• Digital Services Act (DSA): Designed to enhance safety and trans­pa­rency in online envi­ron­ments, such as online plat­forms and online search engines ;
• Data Act (DA): Regulates the use of data in the context of the inter­net of things (IoT) and faci­li­tates cloud migra­tion ; and
• Digital Markets Act (DMA): Targeting « gate­kee­pers » to ensure compe­ti­tive digi­tal markets.

Impact of the EU Digital Strategy on Swiss Companies
What does this regu­la­tory push mean for non-EEA coun­tries like Switzerland ? Swiss compa­nies must unders­tand the EU digi­tal stra­tegy and the common features of these regulations :

1. Extraterritorial Scope : The regu­la­tions apply to compa­nies outside the EEA (extra­ter­ri­to­rially) if their busi­ness affects the EEA market (market place prin­ciple). In addi­tion, some globally opera­ting compa­nies unila­te­rally adopt the EU rules world­wide, making them de facto global stan­dards without other coun­tries formally adop­ting them (so-called « Brussels Effect »). Switzerland has not enac­ted simi­lar laws, but Swiss compa­nies may be affec­ted by these EU acts.
2. Horizontal Regulatory Approach : The AI Act, DSA, DA, and DMA cut across all indus­try sectors. In prin­ciple they also apply regard­less of the company size, although small and microen­ter­prises bene­fit from some exemptions.
3. Heavy Penalties : The EU digi­tal regu­la­tions impose signi­fi­cant penal­ties for non-compliance, excee­ding the range of penal­ties known from the GDPR. The fines can reach up to 6% (DSA) 7% (AI Act) or even 20% (DMA) of global annual turno­ver, increa­sing the legal risks faced by companies.
4. Entry Into Force During Digital Decade : The rollout of these regu­la­tions will take place gradually until 2030. For example, the AI Act’s provi­sions requi­ring compa­nies to ensure their staff have suffi­cient AI lite­racy and prohi­bi­ting certain AI prac­tices will enter into force on February 2, 2025. The remai­ning chap­ters will become appli­cable in stages until December 31, 2030. It is impor­tant for compa­nies to be aware of which new rules are coming into force at any given time.
5. Direct Applicability : The regu­la­tions of the EU digi­tal stra­tegy are entit­led « Acts », such as the « AI Act », and have the legal nature of a gene­rally and directly appli­cable regu­la­tion. Unlike direc­tives, there is no requi­re­ment to trans­pose them into natio­nal law before they become applicable.

Fig. 1 : Topics, sanc­tions and time­line of the EU digi­tal strategy

In sum, the EU digi­tal stra­tegy repre­sents a profound shift in how the digi­tal economy is regu­la­ted. Its direct, extra­ter­ri­to­rial scope and hori­zon­tal approach mean that poten­tially all Swiss compa­nies could be affec­ted. Therefore, all should check if they fall within the scope of these EU regulations.

Tool for Practitioners : Flowcharts on the Extraterritorial Scope of the EU Digital Strategy Compliance will become more complex. To assist, this blog post includes four inter­ac­tive flow­charts to help deter­mine if a company falls under the AI Act, DSA, DA, or DMA.

Fig. 2 Scope of AI Act for non-EEA Companies

Fig. 3 Scope of DSA for non-EEA Companies

Fig. 4 Scope of DA for non-EEA Companies

Fig. 5 Scope of DMA for non-EEA Companies

The flow­charts are English trans­la­tions of those publi­shed origi­nally by the same author in German in : Kasper Gabriel, Extraterritorialer Geltungsbereich der EU-Digitalstrategie, Jusletter, September 23, 2024. For a detai­led expla­na­tion, refer to the mentio­ned origi­nal article. A free copy and an English machine trans­la­tion of the origi­nal article can be obtai­ned from the author.