Following a deal reached between the European Parliament and the European Council on 23 April and 24 March respectively, on 5 July 2022, the European Parliament approved the final text of the Digital Markets Act (“DMA”) and the Digital Services Act (“DSA”).
Alongside the DMA, the DSA focuses on improving safety, protecting fundamental rights in digital environments and ensuring a level playing field in the European Single Market. The DSA and DMA aim to harmonise standards and increase accountability of online services.
In this article, we describe the main features of the incoming DSA and briefly analyse its interaction with the e-Commerce Directive in relation to the liability of online intermediaries.
The DSA lays out clear obligations for digital service providers (marketplaces or social media) to monitor and tackle illegal content, online disinformation and other societal risks. These requirements are proportionate to the risks the platform poses to society.
The new obligations under the DSA cover the following:
- Measures to counter illegal content online and obligations for platforms to react quickly and proportionately (having regard to both fundamental rights, the freedom of expression and data protection);
- More robust checks on online traders to ensure products and services are safe (such as performing random checks on whether illegal content resurfaces);
- Increased transparency and accountability of platforms (such ensuring clear information about content moderation or the use of algorithms for recommending content is provided);
- Banning misleading practices, targeted advertising that targets children and ads based on sensitive data, and misleading practices aimed at manipulating users’ choices.
- Stricter obligations will be imposed on large online platforms and search engines (with 45 million or more monthly users), and the European Commission will ensure enforcement of such obligations. Such stricter obligations will include preventing systemic risks (such as the dissemination of illegal content, adverse effects on fundamental rights, on electoral processes and on gender-based violence or mental health); being subject to independent audits; providing users with the choice to not receive recommendations based on profiling; and providing authorities and vetted researchers with access to their data and algorithms.
Once formally adopted by the European Council in September 2022, the DSA will be published in the EU Official Journal, enter into force 20 days later. The DSA will be directly applicable across the EU and will apply fifteen months or from 1 January 2024 (whichever comes later) after the entry into force. Large online platforms will have to comply with their obligations four months after they have been designated as such by the European Commission.
Interaction between the DSA and the e-Commerce Directive
The DSA will build on the e-Commerce Directive to address new challenges online.
While the e-Commerce Directive will remain in force, the DSA will address the changes and the challenges that have arisen since the implementation of the e-Commerce Directive, especially in relation to online intermediaries.
The DSA will incorporate and update the E-Commerce Directive rules and obligations for the limitation of liability of intermediary services providers, to ensure innovative services can continue to emerge and scale up in the single market. It will retain the conditional immunity from liability for hosting providers and the prohibition of general monitoring or active fact-finding obligations.
The DSA will nevertheless introduce new requirements for intermediaries, such as asymmetric and cumulative obligations for large online platforms and search engines to prevent abuse of their systems, emphasising transparency. It will also empower regulators with broad investigative and enforcement powers to cover non-compliance at both national and EU level.
The material contained in this article is only for general review of the topics covered and does not constitute any legal advice. No legal or business decision should be based on its content.