On 4 October 2022, the Digital Services Act (DSA) was formally adopted by the European Council, following the European Parliament’s adoption in July. It will now be published in the Official Journal of the European Union and come into force 20 days after its publication. The DSA, which was first proposed by the European Commission in 2020, imposes obligations on the providers of various online intermediary services, such as social media and e-commerce websites. The main objective of the DSA is to create a safer and fairer environment online for companies to carry out business and for consumers to make informed commercial decisions. Notably, the DSA extends to non-EU platforms providing services to consumers or business users established or resident in the EU. It is being signalled by politicians as having the potential to become the ‘gold-standard’ for a safer and more accountable online environment.
New Rules for Online
With more power brings more responsibility for providers of online intermediary services under the DSA. It places greater obligations on providers as their operations become larger and the risk associated with their activities increases. Therefore, an online platform such as Facebook or Instagram will have more obligations than a provider acting as a mere conduit or hosting provider. The DSA will safeguard fundamental rights online by implementing, amongst others, the following provisions:
- Measures to counter illegal content online, including illegal goods and services: The DSA provides mechanisms for a harmonised response to illegal content online. These new mechanisms allow users to flag illegal content online, which enables platforms to remove the offending content.
- Banning “dark patterns”: The DSA aims to prevent online platforms from manipulating consumer’s choices through deceptive web design. It aims to allow consumers to make free and informed decisions and evens the playing field for all businesses.
- Increased transparency and accountability of online platforms: Where algorithms are used to recommend content, there must be transparency over how these decisions are reached and how the algorithm works.
Online platforms will be required to publish the number of their average monthly active service recipients in the EU within three months of the DSA entering into force and at least every six months after that. Furthermore, if the Digital Services Coordinator (an independent authority appointed in each member state to supervise compliance) request this from an online platform, the platform must provide the then current information.
As mentioned above, stricter obligations are placed on larger service providers. This service recipient information will enable the European Commission to assess whether platforms should be categorised as very large online platforms to which these increased obligations apply.
While the DSA brings welcomed transparency and fairness in online marketplaces, which consumers and smaller companies will surely benefit from, larger companies and service providers may find it difficult to continue doing business in their usual way once the DSA is fully in force. It remains to be seen how the adoption of these new obligations by online intermediary services providers will affect online shopping in practice. After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and will apply fifteen months after its entry into force which will likely be early 2024.
Please contact the Technology Department or your usual William Fry contact for further updates, advice and insights.
Contributed by Róisín Culligan & Jane Gallagher