The internet has revolutionized the way we live, work, and do business. However, as the digital landscape evolves, so do its challenges. From fake news and hate speech to online fraud and privacy breaches, the online world is not without its flaws. That’s why the European Union is introducing the Digital Services Act (DSA), a new regulatory framework that aims to tackle these issues head-on. The DSA is a comprehensive set of rules that will apply to all online services, including social media platforms, e-commerce sites, and search engines. It will require companies to take more responsibility for the content they host and to provide greater transparency to their users. So, whether you’re a digital marketer, an online business owner, or just a curious internet user, read on to discover what the DSA has in store for us all.

Introduction to the Digital Services Act

The DSA is a proposed legislation by the European Commission that was first introduced on December 15, 2020. It encompasses various online services, including social media platforms, online marketplaces, and more. The primary objectives of the DSA are to:

Protect consumers and their fundamental rights online

Establish a robust framework for transparency and accountability for online platforms

Foster innovation, growth, and competitiveness within the single market

In essence, this new regulation aims to hold search engines, social media networks, and marketplaces accountable for the content that appears on their sites. Currently, the European Parliament and EU Member States have agreed to move forward with the DSA proposal, but it is currently under review by two co-legislators. Once adopted, the DSA will become directly applicable across the EU and will take effect fifteen months after it enters into force or from January 1, 2024, whichever is later.

For online platforms and search engines classified as “very large” (reaching 45 million users or more in the EU), the DSA will start to apply even sooner, just four months after their designation.

Affected online platforms and services

The DSA applies to a broad category of digital services, ranging from simple websites to internet infrastructure services and online platforms. It affects all digital services conducting business in the EU, regardless of the location of the business establishment. However, the regulations are tailored according to the business size, with small and micro companies facing less stringent requirements.

The types of digital services subject to the DSA include:

Online marketplaces

Social networks

Content-sharing platforms

App stores

Online travel platforms

Accommodation platforms

Intermediary services such as internet providers and domain registrars

Cloud and web hosting services

Collaborative economy platforms

Additionally, the DSA applies to “gatekeeper” platforms, which are defined as those with a systemic role in the internal market and act as bottlenecks between businesses and consumers for important digital services.

Key Objectives of the Digital Services Act

The Digital Services Act (DSA) has several key objectives that it aims to achieve. Firstly, it aims to protect consumers and their fundamental rights online. This involves ensuring that users have access to accurate information, their data is safeguarded, and they are not subjected to discrimination based on their online activities. Secondly, the DSA aims to establish transparency and accountability for online platforms. This includes making it mandatory for platforms to disclose how their algorithms function, moderate content, and handle user data. Lastly, the DSA seeks to foster innovation, growth, and competitiveness within the digital single market. It aims to create a level playing field for businesses of all sizes, encouraging the development of new digital services and stimulating economic growth.

Compliance Requirements for Digital Services Companies

Digital services companies must comply with various obligations under the DSA, depending on their classification as intermediary services, hosting services, online platforms, or very large online platforms.

Obligations for Intermediary Services:

Internet providers and domain registrars, categorized as intermediary services, must adhere to the following requirements:

Transparency reporting

Terms of service that respect fundamental rights

Cooperation with national authorities

Designated points of contact and, if necessary, legal representatives

Obligations for Hosting Services:

Hosting services, in addition to the intermediary service obligations, must also:

Implement notice and action mechanisms to address illegal content

Provide relevant information to users

Report criminal offences to authorities

Obligations for Online Platforms:

Online platforms, such as social networks and marketplaces, must comply with both intermediary and hosting service requirements, along with additional obligations, including:

Complaint and redress mechanisms for dispute resolution

Trusted flaggers to report illegal content

Measures to prevent abuse of notices and counter-notices

Transparent recommender systems

User-facing transparency of online advertising

Special obligations for large online platforms

Very large online platforms, such as Google and Meta, must comply with all the requirements mentioned above, as well as additional obligations, including:

Risk management and crisis response

External and independent auditing, internal compliance function, and public accountability

User choice not to have recommendations based on profiling

Data sharing with authorities and researchers

Codes of conduct

Crisis response cooperation

Implications for online advertising

The DSA will have a notable impact on online advertising, particularly with regard to transparency and competition. Small businesses and organizations often rely on large platforms for content moderation and ranking, and these gatekeeper platforms control access to consumer data generated by these activities. The DSA aims to level the playing field by making the internal workings of advertising and ranking algorithms more transparent. Alongside its sister legislation, the Digital Markets Act, it will also require gatekeeper platforms to give small businesses access to specific data.

In conclusion, the Digital Services Act promises to bring sweeping changes to the online landscape, creating a safer, more accountable environment for businesses and consumers. By understanding the implications of the DSA and ensuring compliance with its requirements, digital services companies can continue to thrive in the evolving digital ecosystem.