Flavius Florea, Counsel Wolf Theiss

Article by Flavius Florea, Counsel Wolf Theiss 

In an era dominated by digital technologies, the need for comprehensive regulations that govern online intermediaries has become increasingly apparent. The Digital Services Act (DSA) is an EU aimed at addressing the challenges and opportunities presented by the digital age, which came into force in EU law in November 2022 and will be directly applicable across the EU. This landmark piece of legislation seeks to update and modernize the rules governing online intermediaries, ensuring a safer and more transparent digital environment for users and businesses alike.

Since of August 2023, these rules already apply to designated platforms with more than 45 million users in the EU (10% of the EU’s population), the so-called Very large online platforms (VLOPs) or Very large online search engines (VLOSEs). The DSA rules will apply to all platforms from 17 February 2024.

Background

The Digital Services Act comes as a response to the evolving nature of the internet and the rise of digital platforms that have become central to our daily lives. Social media, e-commerce, and other online services play a crucial role in connecting people, facilitating business transactions, and disseminating information. However, the growing influence of these platforms has raised concerns about issues such as misinformation, hate speech, and the abuse of market dominance. Digital services include a large category of online services, from simple websites to internet infrastructure services and online platforms.

The rules specified in the DSA primarily concern online intermediaries, including the following categories:

• Very large online platforms and search engines - these can entail particular risks in the dissemination of illegal content and societal harms.

• Online platforms – these are platforms together sellers and consumers such as online marketplaces, app stores, collaborative economy platforms and social media platforms.

• Hosting services – these can include cloud and web hosting services (also including online platforms).

• Intermediary services offering network infrastructure – including internet access providers, domain name registrars and hosting services providers.

As such, online marketplaces, social networks, content-sharing platforms, app stores, and online travel and accommodation platforms will all be required to comply with the obligations set out by the DSA.

Key provisions

The primary objectives of the Digital Services Act are to establish a harmonized regulatory framework for digital services across the European Union and to ensure a safe, predictable and trusted online environment, addressing the dissemination of illegal content online and the societal risks that the dissemination of disinformation or other content may generate.

Duty of Care for Platforms: The DSA introduces a duty of care for online platforms, requiring them to take proactive measures to address illegal content, disinformation, and other harmful activities on their services. Further, hosting services providers (including here online platforms) are obliged to implement content moderation policies and mechanisms for users to report harmful content, as well as the obligation to notify law enforcement or judicial authorities of certain suspected criminal offences it becomes aware of. Online platforms must also provide an internal complaint handling system as well to allow users to challenge the platform’s decisions to remove content.

Transparency and Accountability: The DSA aims to increase transparency in the digital space by obliging platforms to provide clear information about their content moderation practices, decision-making algorithms and advertising policies. The information must be provided in clear and unambiguous language and is intended to empower users and stakeholders to better understand and navigate the digital landscape. The intermediary service providers must as well prepare publicly available reports annually on their content removal and moderation activities.

Market Fairness: To address concerns related to market dominance, the DSA includes provisions to prevent unfair business practices, such as self-preferencing by large online platforms. By fostering fair competition, the legislation seeks to create a level playing field for businesses of all sizes.

Cooperation with Authorities: The DSA encourages collaboration between online platforms and relevant national authorities. Platforms are required to appoint a single point of contact in the EU, facilitating communication and cooperation with regulatory bodies, as well as with service recipients.

Challenges and Controversies

While the Digital Services Act represents a significant step towards regulating the digital space, it has not been without controversy. Some critics argue that the legislation may stifle innovation and impose undue burdens on smaller platforms. Striking the right balance between ensuring user safety and fostering innovation remains a challenge for lawmakers. Organisation will need to consider carefully how to comply with enhanced transparency obligations and the requirements to publish certain information specifically required under the DSA. The presentation format and level of detail for the necessary information remain uncertain at present. Nevertheless, organizations will definitely need to implement technical modifications to their platforms to ensure compliance.

Implementation and Enforcement

The successful implementation of the Digital Services Act will most certainly rely on effective enforcement mechanisms. Both national authorities and the Commission bear responsibility for overseeing, enforcing, and monitoring the DAS. 

National authorities possess the primary competence to supervise and ensure compliance with the DSA for intermediary service providers operating within their jurisdiction, regardless of user volume. Meanwhile, the Commission holds exclusive authority to oversee, enforce, and monitor VLOPs and VLOSEs in meeting the enhanced due diligence obligations mandated by the DSA to address systemic risks. However, both the Commission and national authorities share competence for all other obligations imposed on VLOPs and VLOSEs under the DSA.

Conclusion

The Digital Services Act reflects a proactive effort by the European Union to address the challenges posed by the digital age. By setting clear standards for intermediary service providers, including online platforms and search engines, and by promoting transparency, accountability, and fair competition, the legislation aims to create a digital environment that benefits both users and businesses. As the digital landscape continues to evolve, the DSA provides a framework that can adapt to emerging challenges, fostering a safer and more responsible online space. However, organizations must be prepared to adapt to the new regulatory landscape by 17 February 2024, a deadline set for compliance for all intermediary services providers. This transition may present challenges, given the need for adjustments both in technical infrastructure and in operational practices.