The Implications of the EU’s Digital Services Act on Digital Companies

The Implications of the EU’s Digital Services Act on Digital Companies

The European Union’s Digital Services Act (DSA) is a groundbreaking legislation that demands digital companies to take responsibility for illegal and problematic content on their platforms. With the aim of protecting users and ensuring a safer online environment, the DSA imposes strict regulations on digital giants. While the law initially applied to very large platforms, it will now encompass all companies starting from Saturday, albeit with partial exemptions for smaller firms.

Obligations for Platforms

Under the DSA, all platforms are required to swiftly remove illegal content or make it inaccessible as soon as they become aware of its presence. Additionally, platforms must promptly notify the authorities when they suspect a criminal offense that threatens people’s lives or safety. These platforms are also obligated to publish an annual report that details their actions taken on content moderation, including the response time after the notification of illegal content. Furthermore, they should report on the decisions made in disputes with users.

The DSA introduces measures to combat the sharing of illegal content, such as hate speech or fake advertisements, by suspending users who engage in such activities. Moreover, online shopping sites are required to verify the identities of their users and block repeat fraudsters. The legislation also imposes stricter rules on targeted advertising, banning such ads for children aged 17 and under. To protect user privacy, the EU prohibits targeted advertising based on sensitive data, including ethnicity, religion, or sexual orientation.

Not all companies are subjected to the DSA’s more onerous obligations. Small companies, defined as those with fewer than 50 staff members and a turnover of less than 10 million euros, are exempt from certain requirements. This provision aims to alleviate the regulatory burden on smaller businesses while ensuring that larger platforms take more robust measures to combat illegal content and protect user rights.

Challenges Faced by Tech Giants

The EU has identified 22 “very large” platforms, including industry giants such as Apple, Amazon, Facebook, Google, and Microsoft, as well as popular social media platforms like Instagram, Snapchat, and TikTok. Clothing retailer Zalando and three major adult websites are also included on this list. Some of these platforms, such as Amazon and Zalando, have already launched legal challenges against their designations, while Meta and TikTok are disputing the enforcement fees. This highlights the contentious nature of the DSA’s regulations and the potential financial impact on the tech industry.

To ensure compliance with the DSA, large platforms are required to assess the risks associated with their services in relation to the spread of illegal content and privacy infringements. They must establish internal structures to mitigate these risks, including improved content moderation. Regulators are granted access to platform data to assess compliance, with this access also extended to approved researchers. Independent organizations will conduct annual audits, at the platforms’ expense, to verify compliance. Platforms are also required to appoint an independent internal supervisor to monitor adherence to the regulations.

The DSA aims to improve the handling of user complaints. Users will have the ability to lodge a complaint with their competent national authority if they believe a platform is violating the DSA. Online shopping sites may be held responsible for any damage caused by non-compliant or dangerous products purchased by users. Violations of the DSA can result in fines of up to six percent of a company’s global turnover. In cases of repeated non-compliance, the EU even has the power to ban offending platforms from operating within Europe.

The DSA assigns competent authorities in each of the EU’s 27 member states to investigate and sanction violations by smaller companies. These authorities are required to collaborate with each other and with the European Commission, the EU’s executive arm, to ensure effective enforcement of the regulations starting from February. While member states are responsible for enforcing the rules for digital platform providers within their jurisdiction, “very large” platforms will be supervised by the commission itself.

The EU’s Digital Services Act represents a significant step towards holding digital companies accountable for the content on their platforms. By imposing stricter regulations and obligations, the DSA aims to create a safer online space for users within the European Union. However, the implications of this legislation raise important considerations for both large and small digital companies. Balancing the need for user safety with the potential burden on businesses will be a ongoing challenge as the DSA is implemented and enforced.


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