A safer, fairer, and more transparent online world

The EU's Digital Services Act, a major piece of European legislation that is expected to have a significant impact on how online platforms operate in the Union, becomes fully applicable today. Here’s what you need to know.

The European Union’s Digital Services Act (DSA) comes into full force across the Union as of today. The is a landmark regulatory framework aimed at addressing the challenges posed by digital platforms, especially large online platforms and social media companies. The Act was proposed in December 2020 as part of the European Commission’s Digital Services Act package, which also includes the Digital Markets Act (DMA).

The Malta Communications Authority is the Maltese coordinator for the implementation of the European legislation. On its website, it points out that the DSA does not determine what constitutes illegal content. Rather, it focuses on how providers should manage content on their platforms. The DSA sets obligations that providers must follow when handling illegal content notifications and orders from public authorities, ensuring a cohesive approach to content management and user safety.

Ahead of its full enforcement, businesses were advised to assess and adjust their practices as necessary to align with DSA requirements, ensuring full compliance.

Simplified reporting of illegal content

The DSA mandates platforms to establish methods for combating the spread of illegal content, including user-friendly mechanisms for reporting such content. Notable platforms like X, Apple, Pinterest, Facebook, Instagram, and TikTok have already introduced easy-to-use features for reporting illicit content, accessible via options like the three small dots on each post.

Increased transparency and appeal options in content moderation

The DSA requires service providers, including online platforms, to inform users about content removal or account restrictions, with specific reasons for such actions. This enhances users’ ability to understand and contest content moderation decisions. Even platforms like Facebook and Instagram have expanded their content moderation transparency. The DSA Transparency Database, a new initiative by the European Commission, catalogues all content moderation reasons from online platforms, promoting public scrutiny.

Enhanced control over content and personalisation

Providers must offer greater transparency and user control over feed content and personalisation, including options to opt-out of personalised recommendations. This is now a feature on platforms like TikTok, Facebook, and Instagram. The DSA also covers ad transparency, requiring ads to be labelled and details of ad campaigns to be stored in a repository, with enforcement by Member States and the European Commission.

Prohibition of targeted advertising to minors and sensitive data use

The DSA bans targeted ads to minors, with platforms like Snapchat, Google, YouTube, Instagram, and Facebook adjusting their policies accordingly. It also restricts targeted ads based on sensitive personal data. TikTok and YouTube have enhanced privacy for users under 16 by setting their accounts to private by default.

Child protection measures

Platforms accessible to children are required to prioritise their safety, privacy, and well-being, with possible measures including default privacy settings, age verification, and parental controls. TikTok and YouTube, for instance, have automatically set minors’ profiles to private.

Safeguarding electoral integrity

The DSA obligates large platforms to address risks to elections and civic discourse. On paper, the Digital Services Act (DSA) should impact on European Parliament elections, since it requires increased transparency around political advertising, making it easier for voters to understand who is behind the ads they see online and how they are targeted. Also, by restricting the use of sensitive personal data for targeted advertising, the DSA aims to protect voters from being unduly influenced by ads tailored to exploit their personal vulnerabilities or preferences.

Traceability in online marketplaces

Online marketplaces must ensure sellers provide verified identity information before selling, improving buyer protection against illegal goods, and ensuring traceability of sellers. The European Commission and Member States oversee compliance with these marketplace obligations.

The consequences

Upon suspicion or notification of a DSA rule violation, the relevant authority – which is the MCA in Malta or the European Commission for very large, online platforms – will assess the nature, severity, and impact of the infringement.

Initially, authorities may engage in a dialogue with the offending platform or service provider, outlining the violations and requesting corrective measures within a specified timeframe. If the platform fails to comply or the violation is severe, enforcement actions can be taken. One of the most significant consequences is the imposition of fines. The DSA establishes a structured framework for fines, which can be up to 6% of the company’s total global annual turnover for the most serious infringements. This is intended to ensure that penalties are substantial enough to encourage compliance.

In addition to fines, the DSA allows for periodic penalty payments to compel compliance. These are daily fines that accrue until the infringing party rectifies the non-compliance. In extreme cases, where a platform consistently fails to comply with DSA obligations, it could face a temporary or permanent ban on operating within the European Union. This measure would be considered a last resort, given its significant impact.

The DSA also includes provisions for the public disclosure of non-compliance and enforcement actions. This transparency aims to inform users and stakeholders about platforms’ adherence to regulations and any risks they may pose.

Platforms and service providers have the right to appeal against enforcement decisions made by the authorities. This ensures that there is a mechanism for review and correction of potentially erroneous decisions.

Critics are criticising

Whilst the DSA represents a significant effort by the EU to regulate the digital space, some have raised concerns regarding its provisions and potential impacts. While the DSA aims to create a safer and more accountable digital space within the European Union, critics argue it may have unintended consequences.

Impact on free speech and content moderation

One of the primary concerns is that the DSA could inadvertently limit free speech online by imposing stringent content moderation requirements on platforms. Critics argue that, to comply with the DSA and avoid penalties, platforms might over-moderate content, leading to excessive censorship or the removal of legitimate expression. This concern revolves around the balance between combating illegal content and protecting users’ rights to free expression.

Compliance costs and burden on SMEs

While the DSA primarily targets large online platforms, critics argue that the regulatory burden and compliance costs could disproportionately affect small and medium-sized enterprises (SMEs) that lack the resources of larger companies. This could potentially stifle innovation and competition by making it more difficult for smaller players to enter and compete in the digital market.

Ambiguity and legal uncertainty

Some opponents point out that certain aspects of the DSA are vague or open to interpretation, leading to legal uncertainty for online platforms. They argue that unclear definitions and requirements could make it challenging for companies to understand their obligations, potentially leading to inconsistent application and enforcement of the rules across the EU.

Risk of fragmentation in the Digital Single Market

Critics are concerned that the DSA, despite its intent to harmonise rules across the EU, could lead to fragmentation in the digital single market. This could happen if member states implement or interpret the DSA’s provisions differently, creating a patchwork of regulations that complicates cross-border operations for digital services.

Global impact and international trade

There are also concerns about the DSA’s impact on international trade and the global operations of digital companies. Critics argue that the regulation could create barriers to market entry for non-EU companies or lead to conflicts with other jurisdictions’ laws. This could potentially affect the global digital economy and lead to retaliatory measures or trade disputes.

Effectiveness and enforcement challenges

Some opponents question the effectiveness of the DSA in achieving its goals, pointing out potential challenges in enforcement, especially when dealing with platforms and content outside the EU’s jurisdiction. They argue that, without effective international cooperation and compliance from non-EU platforms, the DSA’s impact could be limited.

Still in doubt?

Overall, the DSA aims to create a more transparent, accountable, and safe digital environment. To obtain further details about how the DSA rules may impact your local business or your life as an online reader or consumer, click here.

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