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EU Digital Services Act to make internet safer

Author: ICAEW Insights

Published: 03 May 2022

Beefing up of digital regulation enforces increased transparency on big tech companies and new emergency powers prompted by the Ukraine crisis.

The EU has taken a firm step towards beefing up digital regulation of the internet after the Council and the European Parliament this month signed a provisional agreement for the establishment of the EU Digital Services Act (DSA).

In what it described as a world first in the field of digital regulation, the Act follows the principle that what is illegal offline must also be illegal online. Its goals are to allow free and fair competition in the digital sectors and create a level playing field for EU businesses by regulating big tech; to protect the digital space against the spread of illegal content, and to ensure the protection of users’ fundamental rights. 

The rules specified in the DSA primarily concern the protection of the interests of consumers of value on online intermediaries and platforms, for example, online marketplaces, social networks, content-sharing platforms, app stores and online travel and accommodation platforms, and the prohibition of misleading interfaces known as ‘dark patterns’ and practices aimed at misleading users.

Under the Act, these ‘gatekeeper platforms’ will have to allow third parties to interoperate with the gatekeeper’s own services in certain specific situations and allow their business users to access the data that they generate in their use of the gatekeeper’s platform 

Gatekeeper platforms must also provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper and allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform.

The rules also stipulate that gatekeeper platforms may no longer treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper’s platform. Nor can they prevent consumers from linking up to businesses outside their platforms or stop them from uninstalling any pre-installed software or app if they so wish.

The DSA will apply to all online intermediaries providing services in the EU, although the obligations introduced are proportionate to the nature of the services concerned and tailored to the number of users, so that very large online platforms (VLOPs) and very large online search engines (VLOSEs) – that is, services with more than 45 million monthly active users in the European Union – will be subject to more stringent requirements. 

Under the Act, these very large digital platforms and services must conduct an annual risk reduction analysis specifically relating to dissemination of illegal content, content with adverse effects on fundamental rights, manipulation of services having an impact on democratic processes and public security and content deemed to have adverse effects on gender-based violence, and on minors and serious consequences for the physical or mental health of users. 

In the context of the Russian aggression in Ukraine and concerns about manipulation of online information, a new article has been added to the text introducing a crisis response mechanism that will make it possible to analyse the impact of the activities of VLOPs and VLOSEs on the crisis in question and decide on proportionate and effective measures to be put in place to safeguard fundamental rights.

The proposed Act would allow the Commission to impose sanctions of up to 6% of global turnover or even a ban on operating in the EU single market in case of repeated serious breaches.

Micro and small enterprises with fewer than 45 million monthly active users in the EU will be exempted from certain new obligations in a move intended to safeguard the development of start-ups and smaller enterprises in the internal market.

Margrethe Vestager, Executive Vice-President of the European Commission for a Europe Fit for the Digital Age, added: “With the DSA we help create a safe and accountable online environment. Platforms should be transparent about their content moderation decisions, prevent dangerous disinformation from going viral and avoid unsafe products being offered on marketplaces. With today’s agreement we ensure that platforms are held accountable for the risks their services can pose to society and citizens.”

The provisional agreement reached is subject to approval by the Council and the European Parliament.