Having been approved by a vote of the Council of Ministers, the EU’s Digital Services Act (DSA) was published in the Official Journal of the European Union on October 13, 2022 and is expected to come into force in November. Alongside the Digital Markets Act (DMA), the DSA is one of the flagship projects of the current European Commission’s comprehensive European digital strategy. The Commission has presented the DSA as a ground-breaking regulation which will redefine the relationship between online platforms and users and regulators in the EU, an area which has not changed since the adoption of the E-commerce Directive in 2000. The new rules uniformly govern the activities of digital services providers acting as intermediaries in providing goods, services and content to consumers online.

The DSA’s aims include:

• Protecting the digital space against the spread of illegal content

• Establishing a powerful transparency and clear accountability framework for online platforms

• Ensuring the protection of users’ fundamental rights

Fines for non-compliance will reach up to 6% of an organisation's annual global turnover.

A layered approach to imposing obligations on digital service providers

The DSA introduces new duties for digital intermediary services providers and new rights that may be exercised by users. Duties vary according to different categories of intermediary provider defined in the new regulations which include social media, online marketplaces, very large online platforms (VLOPs) and very large online search engines (VLOSEs). The rules are designed asymmetrically so that intermediary services with greater societal impact (VLOPs and VLOSEs) are subject to stricter rules.

All categories of intermediary services will not only have to be more transparent but will also be subjected to accountability measures for their role in disseminating illegal and harmful content. The key provisions of the DSA include:

• Measures to counter illegal goods, services or content online, such as a mechanism for users to flag such content and for platforms to cooperate with “trusted flaggers”

• New obligations on traceability of business users in online marketplaces, to help identify sellers of illegal goods or reasonable efforts by online marketplaces to randomly check whether products or services have been identified as being illegal in any official database

• Effective safeguards for users, including the possibility to challenge platforms’ content moderation decisions

• A ban on certain types of targeted adverts on online platforms (when they target children or when they use special categories of personal data, such as ethnicity, political views, sexual orientation)

• Transparency measures for online platforms on a variety of issues, including on the algorithms used for recommendations

• A new oversight structure to address the complexity of the online space:

  • EU countries will have the primary role, supported by a new European Board for Digital Services

  • For very large platforms, supervision and enforcement will be enforced by the Commission

Stricter rules will apply to businesses in the VLOSE and VLOP categories who will have to:

• Offer users a system for recommending content which is not based on profiling

• Prevent the misuse of their systems by taking risk-based action and performing independent audits of their risk management systems

• Provide researchers access to key data in order to understand how online risks evolve

The DSA also creates a new “crisis mechanism” that will enable the European Commission to intervene at times of threats to public security or health. The mechanism will make it possible to analyse the impact of the activities of VLOPs and VLOSEs on the crisis in question and rapidly decide on proportionate and effective measures to ensure the respect of fundamental rights.

Scope

The DSA will apply to providers of intermediary services, regardless of their place of establishment or residence, if they operate in the EU and there is a “substantial connection” to the EU.

A substantial connection exists when the provider fits into one of the three categories:

• Has an establishment in the EU

• Has a significant number of users in the EU

• Targets its activities towards one or more EU member states

All online intermediaries offering their services in the single market, whether they are established in the EU or outside, will have to comply with the new rules.