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CWA # 1092, 15 October 2023
NIAS Europe Studies
EU Digital Services Act: Three implications

  Sreeja JS

About the Author

Sreeja JS is a Research Intern at NIAS. 

On 25 August, the EU's ambitious Digital Services Act (DSA) came into effect with a new set of regulations for online platforms and search engines with a large user base in the EU. DSA aims to ensure big tech companies such as Google and Facebook, take measures to create a safer and transparent digital space, moderate illegal content, and prevent the promotion and proliferation of hate speech and disinformation.
 
What is the Act about?
According to the European Commission, the goal of DSA is to create a safer digital space with new rules on privacy, security, and data sharing. The Digital Services Act and Digital Markets Act are part of the Digital Services Package adopted by the Council of Europe and the European Parliament in 2022. Some of the Digital Services Act provisions came into force on 16 November 2022.
 
On 25 April 2023, the European Commission adopted its first set of decisions on designations. Accordingly, the Commission designated 17 social media and online shopping platforms as Very Large Online Platforms (otherwise called VLOPs) and two search engines, Google and Bing, as Very Large Search Engines (otherwise called VLOSEs) with at least 45 million users in the EU. These platforms and search engines would now have to comply with a full set of obligations that came into force on 25 August. EU would require the VLOPs and VLOSEs to update their user numbers at least once every six months so that if a platform has less than 45 million users in a year they would be removed from the list. Failure to comply with the new rules would result in billions of euros (up to six per cent of their global turnover) in penalty and even an EU- wide ban. The law aims to give users of these platforms, including minors, more rights and influence over their accounts to ensure better privacy and security. According to the European Commission, DSA would become applicable to all entities within scope by 17 February 2024 and the member states are required to empower their Digital Services Coordinators by that time.
 
The new set of obligations that came into force focuses on:
1. Measures to tackle disinformation: The large online platforms enumerated as VLOPs and VLOSEs would have to identify, analyse, and mitigate an array of systemic risks. The systemic risks pertain to the dissemination of illegal content and the negative effects on fundamental rights, electoral processes, and gender-based violence or mental health. They are obliged to carry out their first annual risk assessment and share the data with the European Commission. 

2. Strong protection of minors and ban on targeted advertising: DSA also introduced two restrictions regarding data protection on targeted advertising. Firstly, it aims to ban targeted advertising of minors based on profiling. Secondly, the ban on targeted advertising using special categories of personal data such as race, gender, sexual orientation, and religion. 

3. Enhancement of transparency and accountability: The act includes provisions for delegated regulation on data access. Thus, the large platforms would have to give vetted researchers access to its data that is publicly available. According to the European Commission, it would further specify the conditions for the sharing of data and the purposes for which the data may be used.

What are the implications of the Act?  
Firstly, regulations for the online platforms. Many of the big tech companies such as Google, Meta, TikTok and Snapchat enlisted in the VLOSEs and VLOPs have already outlined how they would comply with the DSA. For instance, Google reiterated that it already complies with some of the rules and regulations of DSA, including the ability to provide YouTube creators to appeal against video removals and restrictions. Further, Amazon announced that it is expanding its Ad Transparency Centre to meet the requirements of the Act. Meanwhile, Meta, the parent company of Facebook and Instagram said that it is working to expand its Ad Library. It added that soon it would start displaying and archiving all the ads targeting the EU users while including the parameters used and the users targeted by the ads. When a majority of the companies have agreed to comply with DSA, Amazon and Zalando have challenged their inclusion in the list. In July 2023, Reuters, reported on Amazon's legal challenge with the Luxembourg-based General Court, asking the court to annul its designation in VLOPs as its big rivals in the EU were excluded from the list. However, Amazon implemented numerous features such as a channel for users to report incorrect product information to show its compliance with the DSA. Previously, German retailer Zalando flagged a similar legal challenge against the European Commission arguing that its user base is below the 45 million threshold (June 2023).
 
Secondly, uniform regulations across the EU member states. According to the European Commission, DSA would provide one set of rules for all the EU member states. All the citizens of the EU, irrespective of their countries, would have a common enforcement system to safeguard the digital space. Further, DSA would apply directly and supersede overlapping national laws of the same objective. Besides, EU member states cannot go beyond the Regulation in their national laws as DSA is a harmonization instrument. The supervision of the regulations would be shared between the European Commission and the member states. The Commission would be primarily responsible for the VLOPs and VLOSEs, while the member states would be responsible for smaller platforms or search engines in line with the state’s preference.
 
Thirdly, enhanced empowerment and protection for users. The important agenda of DSA is to create a safe and sound digital space and empower the users in the EU member states to freely express their ideas and opinions. It also aims to create a safe space to engage in online shopping by reducing the risks of illegal activities, and dangerous products and to ensure the protection of fundamental rights. According to Deutsche Welle, the law coming into effect would mean providing reasons for moderation, deletion and ban of the content to the users. This is to ensure transparency. By February 2024, consumers and consumer rights groups would also have the opportunity to use various mechanisms to appeal if their content had been moderated.

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