- The EU’s relaunched e-commerce rules are fully applicable from tomorrow, potentially setting new legal obligations on thousands of platforms and digital businesses.
- Platforms, marketplaces, and other scope digital service providers that fail to comply with DSA face severe penalties – fines of up to 6% of global annual turnover for identified violations.
- In addition to applying content moderation rules to platforms and understanding customer needs in the market, the regulation also applies a number of obligations to hosting services and other online intermediaries.
The EU’s relaunched e-commerce rules are fully applicable from tomorrow, potentially setting new legal obligations on thousands of platforms and digital businesses.
What is DSA
The Digital Services Act (DSA) is a huge EU effort to establish an online governance framework for platforms and to use transparency obligations as a tool to remove illegal content and products from the regional Internet.If something is illegal in a particular Member State, then it should not be circumventing the law by disseminating it on the Internet.
Protecting minors is another focus – the bill states that platforms and services within scope must ensure a “high degree of privacy, safety and security” for children, and prohibits the use of their data for targeted advertising. The EU could not give an exact figure on how many companies were included in the framework, especially as new digital platforms continue to emerge, but said it expected at least 1,000 to be subject to the rules.
Platforms, marketplaces and other digital service providers within the scope of the DSA that fail to comply will face severe penalties – fines of up to 6% of global annual turnover for identified violations.
Rules for small platforms
Smaller platforms such as early-stage startups that have yet to gain a lot of scale – defined as “micro” or “small” businesses employing less than 50 employees and having an annual turnover of less than €10 million – are exempt from most of the regulations. But they still have to make sure they have clear and concise terms and conditions; To provide a point of contact for the authorities. Companies within the scope have had more than a year to develop compliance plans since the text of the law was published in October 2022. Although there are still many details to be filled in, with the establishment of the DSA regulatory body, and the development of guidelines began. That means many businesses may still be struggling to figure out exactly how the rules apply to them.
Big tech also has more rules
Major tech platforms and marketplaces face the strictest regulation of DSA. They have passed a compliance deadline: a subset of the DSA rules, focused on algorithmic transparency and systemic risk mitigation, which have been applied on large platforms and search engines (aka vlop and vlose) since late August. In December, the committee also launched its first formal investigation into a series of suspected violations at Elon musk’s X(formerly Twitter).
But even the larger platforms, the nearly 20 tech giants that, like X, have been designated as subject to vlop and vlop rule constraints from Saturday are expected to comply with the general obligations of the DSA. So if Musk has already done a bad job of complying with the DSA, he now has a whole bunch of requirements to worry about when the weekend rolls around.
Again, until consensus on best practices is reached and compliance guidelines are developed (and, in some cases, confirmation of appointment of a DSC), regulated platforms and services will have to figure out their own way forward.
The DSC will also be the point of contact for citizens who want to make DSA-related complaints.(If citizens complain about a platform that is not regulated by a specific agency, they will be responsible for sending it to the relevant authorities.)
However, EU consumers don’t just rely on regulators to act on their complaints. If companies do not respect their rights under the Act, they can also resort to class-action remedies.As a result, non-compliant platforms are also at risk of being sued.
DSA interventions have been struggling
Looking at the implementation of other EU digital rules in recent years, it seems likely that platforms will be given some grace periods to get up to speed and time for the system to work, including enforcement officers standing completely under the table.Although, given that this is decentralized enforcement, some Member State authorities may be more eager to act than others, we can see that DSA interventions occur at different rates in the region.
The DSC has the right to impose fines of up to 6% of global annual turnover for breaches of the regulations, which is the same level of penalty that the European Commission imposes on vlop/vlose for breaches of additional obligations applicable to large platforms and search engines. So, in theory, from Saturday, Europe faces many new regulatory risks.
Full implementation of the regime also means that VLOPs like X could face separate fines from the European Commission and DSC – that is, if their compliance fails to meet both sets of obligations.
One thing is clear :DSA adds complexity to the platforms operating in the region, applies a whole new set of obligations, and unrolls another enforcement web – on top of the growing number of existing laws that may also apply to digital business, Examples include the General Data Protection Regulation, the Electronic Privacy Directive, the Data Act and the upcoming Artificial Intelligence Act (just to name a few).
Changes and challenges
In an early sign of potentially interesting times, Coimisiun na Mean in Ireland recently consulted on rules for video-sharing platforms that could force them to turn off profile-based content feeds by default in their local markets.
In this case, the policy proposal was made under the EU Audiovisual rules, not the DSA, but given how many major platforms there are in Ireland, if a similar approach were taken when applying DSA to Meta, TikTok, X and other tech giants, As a DSC, Coimisiun na Mean could lead to some interesting regulatory experiments.
Also read: Mobile data in Europe to triple by 2028 and big tech should pay the bill
