The EU Digital Services Act (DSA)

The Digital Services Act (DSA), adopted by the European Union in 2022, is one of the most comprehensive regulations aimed at overseeing the activities of online platforms. This groundbreaking legislation introduces new responsibilities for digital service providers, focusing on transparency, accountability, and user safety.

In this blog, we’ll explore the key provisions of the DSA, its objectives, and how it affects global tech giants like Google, Meta, and Amazon.

What is the DSA?

The DSA provides a legal framework to regulate digital services, including social media platforms, e-commerce sites, search engines, and online marketplaces.

• Goals of the DSA:

  1. Combat illegal content online.

  2. Enhance transparency and accountability.

  3. Curb the excessive market power of major tech companies.

• Who Does It Cover?
  The DSA applies to all digital service providers operating within the EU, regardless of where they are headquartered.

Key Provisions of the DSA

The DSA establishes different responsibilities based on the size and type of platform, with stricter rules for Very Large Online Platforms (VLOPs)—platforms with more than 45 million users in the EU.

a. Tackling Illegal Content

The DSA requires platforms to actively identify and remove illegal content.

• Article 8: Platforms must promptly remove illegal content once reported by users.

• Article 14: Platforms must ensure transparency in content moderation processes and protect users’ right to appeal decisions.

b. Transparency and Accountability

Platforms must disclose how their algorithms work, provide users with more information about ads, and ensure transparency in content moderation.

• Article 24: Platforms must clearly explain why users are seeing specific ads.

• Article 30: Annual transparency reports are required, detailing the platform’s algorithmic practices.

c. Additional Obligations for VLOPs

Major platforms like Google, Meta, and TikTok face heightened requirements:

• Article 33: They must conduct regular risk assessments to address systemic issues, such as the spread of harmful content.

• Article 35: Independent audits are mandatory to ensure compliance with the DSA.

d. Consumer Protections

The DSA also enhances consumer safety in e-commerce settings.

• Article 17: Online marketplaces must verify the identities of sellers to prevent the sale of illegal goods.

How Does the DSA Impact Global Tech Giants?

a. Increased Scrutiny

The DSA imposes new obligations on global tech giants to be more transparent about their operations and accountable for their algorithms.

• Platforms must explain how their algorithms recommend content.

• They are required to consult with EU regulators and provide detailed reports.

b. Financial Consequences

Failure to comply with the DSA can result in fines of up to 6% of a company’s global annual revenue (Article 83). This creates a strong incentive for compliance.

DSA in the International Context

While the DSA applies within the EU, its implications extend globally:

• Global Standards: Companies often align their global policies with EU regulations to maintain operational consistency.

• Influence on Other Jurisdictions: Countries like the US, Canada, and Japan are considering adopting similar standards inspired by the DSA.

Challenges and Criticisms

While the DSA is a significant step forward, it faces several challenges:

• Implementation Issues: Ensuring platforms conduct meaningful risk assessments and comply with transparency requirements may be difficult in practice.

• Administrative Burden: Smaller digital service providers may struggle with the compliance costs and bureaucracy involved.

Conclusion

The Digital Services Act represents a bold move by the European Union to create a safer and more transparent digital environment. By holding platforms accountable for their operations, it not only empowers users but also sets a global benchmark for regulating the digital economy.

For global tech companies, the DSA is a regulatory challenge but also an opportunity to build trust and improve transparency in their operations. Its ultimate success will depend on effective enforcement and collaboration between the EU and international stakeholders.