Platform Regulation in the EU: 10 FAQs of the Digital Services Act (DSA)
In the past decade, Europe’s burgeoning digital economy has seen active policymaking manifesting in diverse regulations, directives and guidelines. The Digital Services Act (DSA) is the most recent, most anticipated and probably the most comprehensive of legislations targeting digital platforms in Europe.
On the 16th of November 2022, the DSA entered into force covering “all digital services that connect consumers to goods, services, or content.” In this article, I highlight the key takeaways from the Act by answering some frequently asked questions. Remember, this is not an exhaustive list of questions.
1. What is the DSA?
As earlier mentioned, the DSA is the Digital Services Act passed by the European Parliament and the Council. Both institutions okayed the rules on 23 April 2022 and it got published on 27 October 2022 in the European Union (EU) Official Journal. The DSA entered into force on 16 November 2022 and will become enforceable from 17 February 2024, which is in about 12 months at the time of writing.
The DSA will regulate digital platforms that serve as intermediaries between service providers and buyers. The general aim is to unify the obligations of digital platforms in the EU and establish an enforceable transparency and accountability framework.
2. Who does the DSA apply to?
Users, buyers, sellers, and the digital platform that connects them. This includes social media networks, marketplaces, ride-sharing, travel and accommodation online platforms, internet service providers and hosting platforms. Large online platforms and search engines have additional obligations to take practical measures against “disinformation or election manipulation, cyber violence against women, or harms to minors online”. However, there is a need for balance so that such measures do not infringe on the right to freedom of expression. An independent audit will check compliance.
New rights were bestowed on users in the DSA. Ranging from “a right to complain to the platform, seek out-of-court settlements, complain to their national authority in their own language, or seek compensation for breaches of the rules.” Whether individually or in groups, the Act allows representative organizations to defend users in event of a breach.
Companies outside the EU offering their products or services to EU citizens are within the regulatory oversight of the Act. Usually, these companies can coordinate compliance through a representative in the EU.
3. What does the DSA apply to?
The Act will apply to digital content, goods and services, and of course, the platforms powering them. Content moderation is a key highlight in the DSA that allows users to flag illegal content and mandates “specialized flaggers” to remove such flagged content, goods or services. On the flip side, users who have their content removed can also demand an explanation or challenge such decisions. The aim is to safeguard users from unlawful censorship.
4. Who exercises regulatory oversight?
The primary regulator under the DSA is the European Commission, extending its enforcement arms over online platforms with 45 million users and the ability to impose fines up to 6% of revenue. Platforms with lower numbers fall under the supervision of the countries where they are based. Member States are expected to appoint Digital Services Coordinators, who will serve as national regulators, latest 17 February 2024.
5. What are the new data-sharing provisions allowed?
An innovative highlight of the Act is the Cross-Platform Collaboration provision. Not exactly named so in the Act, but considering how we expect it to work, I thought the name befitting. Self-regulation is often a lonesome, thankless and sometimes ineffective journey for online platforms, not to mention working in silos to tackle fraudulent users. With the DSA, users can now be traced on multiple platforms, allowing platforms to verify identities and activities against databases from other platforms. This means a user who got away with fraudulent activities on another platform will have warning bells ringing, heralding their arrival on any new platform they join.
6. What are the transparency obligations?
Online platforms must be transparent with the information in their policies like the terms and conditions, and the algorithms used for recommending products, services and content to users. Still on transparency and also relating to the data sharing question above is that in the Act, key (think large) platforms must allow researchers access to data needed for platform scrutiny and audits.
7. Are there express bans?
Yes. Under the DSA, targeted ads profiling minors or children are banned. Ads based on special categories of data like “ethnicity, political views or sexual orientation” are banned. It also banned influencer commercial communications without transparent disclosures. These bans aim for more transparency of advertising practices on online platforms. Lastly, the use of ‘dark patterns’ is banned. Dark patterns are camouflaged practices that trick users into doing the opposite of their intentions. I guess finally, all those “No, I don’t want to be successful” options to opt-out of a list will finally be a thing of the past.
8. Is there anything relating to minors and children in the Act?
Yes, the DSA imposes new obligations aimed at further protecting minors and children. First, there is the mandatory obligation of platforms servicing children to ensure a high level of “privacy, safety and security”. Second, as mentioned above, targeted advertising to minors and children is expressly banned.
9. Does the Act define what illegal content is?
There is no express definition of what constitutes illegal content in the Act. However, definitions of illegal content can be found at both the EU and national levels, for example in laws relating to terrorism, child abuse and hate speech. On the national level, the application of definitions is territorial, meaning only deemed illegal within the jurisdiction where the law applies.
10. What is the DSA not?
The DSA is many things, but it is not a replacement for other sector-specific legislation, it is intended to be complementary. It is also not introducing a digital tax. Dedicated and separate legislation on digital tax is still in the works.
Overall, the Digital Services Act promises a positive impact on users in particular and a boosting effect on the EU digital economy in general. As enforcement is still nascent, there is still much room for observation. What is important is a continuation of efforts to make the internet safe for everyone in the EU and worldwide.