Digital service providers like Google, Amazon, Facebook, and others are indispensable today. Online platforms offer significant advantages for both consumers and businesses. They facilitate cross-border trade, enable information exchange, and especially open up new business opportunities for European companies. At the same time, however, they are also misused for the dissemination of illegal content, the sale of illegal goods, or the provision of illegal services. To curb the risks for platform users and reduce competitive disadvantages for competitors, the EU has enacted the Digital Services Act (DSA). Very large online platforms had until August 25, 2023, to comply with the obligations under the DSA.
The most important points in brief
- The Digital Services Act aims to uniformly regulate the activities of providers of digital services within the EU in the future.
- As an EU regulation, the DSA applies directly in all EU member states, without requiring further national implementation by the EU member states.
- The goal is to create a safe digital space where consumers' fundamental rights are protected and a level playing field exists for businesses.
- Very large online platforms and search engines were obliged to implement the obligations under the DSA as early as August 25, 2023.
Objective of the new law
The Digital Services Act builds upon the provisions of the E-Commerce Directive and aims to address the specific problems associated with online platforms and search engines. The Act is intended to strengthen consumer protection online and ensure compliance with fundamental rights and freedoms on the internet, while providing a consistent framework throughout the EU. In this context, illegal content and disinformation are to be reduced as much as possible.
Online intermediary service providers as addressees
The regulations of the Digital Services Act generally apply to all providers of online services, including those that do not have a registered office within the EU but enable access to goods, services, and other content within the EU. Hosting services, such as cloud service providers, are also affected by the regulations. Very large online platforms, such as Facebook, Instagram, or Twitter, and very large search engines, such as Google, are subject to stricter regulation and must fulfill additional obligations. According to the DSA, „very large online platforms“ are considered those that reach at least 45 million active users within the EU per month. These are identified by the EU Commission.
New obligations for providers of digital services
In addition to due diligence and transparency obligations, the DSA includes enforcement mechanisms, such as fines. As an EU regulation, it is directly applicable in all EU member states without the need for additional implementation acts. After being published in the EU Official Journal on October 27, 2022, the law entered into force on November 16, 2022. The requirements of the new law must be implemented by February 17, 2024, at the latest. For providers of very large online platforms and search engines within the meaning of the DSA, this applies from 4 months after designation by the Commission, if this occurs before February 17, 2024. Very large platforms were required to publish the number of their active users by February 17, 2023. Based on the published user numbers, the EU Commission identified and published a list of very large online platforms and search engines in accordance with the DSA on April 25, 2023. This affects 17 platforms and 2 search engines, including, among others, Amazon, Bing, Apple, Google and Meta companies, and the Chinese company Alibaba. These had until August 25, 2023, to comply with the obligations under the DSA.
Obligations for all providers of intermediation services
- All providers of intermediary services are obligated to, Annual transparency reports on content removal and blocking practices to publish. Enhanced reporting obligations apply to online platforms and very large online platforms.
- In addition, providers must Contact point provide for authorities and users.
- The providers are also obliged to Execution of Arrangements on the procedure against unlawful content issued by national authorities, with immediate effect to share.
- Furthermore, the Terms and Conditions In clear, understandable, and user-friendly language, specify what restrictions and moderation measures apply to user content and inform about essential changes to the Terms of Service.
Additional obligations for hosting service providers
As a provider of Hosting services, i.e., as soon as user data and content are stored, increased obligations apply.
- These include in particular the obligation to Message upon suspicion of commission of criminal offenses through the published content of users and the provision of necessary information.
- Furthermore, providers are required to set up a so-called. Notice-and-Action Systems obligated to enable users and third parties to report illegal content.
- Furthermore, we must Restrictions for users who have published content that is illegal or violates the terms of service, justified become.
Significantly increased obligations for online platforms
Additional significant obligations will be added for online platforms.
- Providers must Complaint and Redress Mechanisms create that allow users to more easily report illegal goods, services, or content and to appeal platform decisions about removed illegal content.
- Out-of-court dispute resolution must be possible in connection with platform decisions to block content and users must be informed about this possibility.
- In addition, online platform operators are more transparency obligated, as the law requires extensive information about the algorithms used to recommend content or products to users.
- Users who regularly provide obviously illegal content, must, after prior warning locked become.
- Furthermore, the obligation to Labeling of any advertising transparency should be created on online platforms. The Use of Dark Patterns, where users are guided towards specific decisions through targeted design or suggestions. impermissible. The rejection of cookies must also not be more difficult than giving consent. Advertising measures that are specifically aimed at certain target groups, such as minors (so-called targeted ads), are also prohibited.
- In addition to the general transparency reporting obligation, regarding the Number and implementation of disputes before the dispute resolution body, account closures and semi-annually over the Number of monthly active users to report.
- Additionally, there are some Special regulations (Art. 29-32 DSA) for online platforms that offer consumers Conclusion of Distance Contracts with Third-Party Businesses enable (so-called online marketplaces).
More comprehensive obligations for very large providers
Due to the significant additional risks associated with the extensive use of very large online intermediation services and search engines, providers of such services face even more extensive obligations.
- Specifically, under the DSA, there is an obligation to conduct an annual risk assessment. This assessment must, among other things, examine whether the services have negative effects on the exercise of fundamental rights by users, such as freedom of opinion and information.
- In addition, the platforms and search engines are to undergo an annual external independent audit to ensure compliance with the provisions and analyze systematic risks for users. In this context, providers are obliged to grant the EU Commission and the respective Digital Services Coordinator at the place of establishment access to the relevant data. The EU Commission is responsible for supervising very large online platforms with over 45 million monthly active users in the EU. In Germany, the Federal Network Agency is responsible for the role of the Digital Services Coordinator.
- Furthermore, users must be informed that they have the option to opt out of profiling-based product recommendations.
- Online advertising on very large online platforms and search engines must be archived for at least one year.
- In the requested Transparency Reports Additional information must be included regarding the individuals employed for content moderation, as well as the average monthly user numbers, broken down by member state.
Privileging micro and small enterprises
Micro and small enterprises, i.e., companies employing fewer than 50 people and generating an annual turnover of less than 10 million euros, are not affected by the new regulations. However, general data protection and competition law requirements apply to them.
Limitation of liability under the DSA
In addition to the tightened and partially new obligations, the DSA contains a liability privilege for online service providers. However, this corresponds to the previous legal situation under the Telemedia Act. According to this, providers of online intermediary services are not liable if they have no actual knowledge of illegal user content or if they remove such content immediately upon gaining knowledge of it.
Conclusion
It remains to be seen how the legal innovations will play out in practice. Companies like Facebook and TikTok have already become active and initiated initial measures. Amazon and Zalando do not want to simply accept the new rules and have filed lawsuits, as they believe they have been unfairly classified as very large online platforms within the meaning of the DSA and that the requirements do not apply to them as traders. Against this background, it cannot be ruled out that other platforms may also take legal action. What is certain is that all larger companies offering online intermediation services, i.e., not just the „big players,“ must expect increased compliance efforts. This is because the law generally addresses all providers of digital services and only provides an exemption for micro and small businesses. Providers should therefore act proactively and engage with the new obligations to meet the legal requirements. Otherwise, sanctions threaten, particularly fines of up to 6 percent of the previous year's worldwide turnover.
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