The big tech companies have strongly influenced the Internet in recent years. The tech giants such as Google and Meta (Facebook) obtained such a defining position over the past 15 years that they themselves have come to define, so to speak, the ground rules of today’s Internet.
With stricter regulation in the form of the De Digital Service Act (DSA), the European Union aims to end the dominance of large tech companies and thereby better protect consumers.
But, what exactly does the Digital Service Act (DSA) entail and what does it mean for you? In this blog, we tell you more about it.
What exactly is the Digital Service Act (DSA)?
The Digital Service Act (DSA) is part of European legislation regulating large tech companies to provide better protection for consumers and smaller platforms. To this end, the DSA states that online platforms, search engines, ISPs and marketplaces should be transparent about what ads are and who the advertiser is.
The DSA also argues that online marketplaces become liable and accountable for the activities on their websites. This requires online marketplaces, for example, to provide more information about both providers and sellers on their platform. This means that procedures around verification will become mandatory. KYC obligations, aka Know-Your-Costumer, are thus becoming the new standard. Anonymous marketplaces will be banned with the introduction of the Digital Service Act.
In addition, it should be possible for researchers and government regulators to look into the data of online companies. So it should be possible for a third party, in this case government regulators, to gain insight into online activities and services.
What is the purpose of introducing the DSA?
With the Digital Service Act (DSA), the EU aims to protect civil rights such as freedom of expression and to curb illegal online activities. These include incitement to hatred or violence, copyright infringement and distribution of child pornography.
Here, Internet companies and platforms are not held directly responsible for the activities on their websites, but must be able to demonstrate that such illegal actions are being combated. The EU believes that things that are illegal in the offline world are also illegal in the online world, and that should be controlled through the DSA’s new legislation.
What does the European agreement on the DSA mean for you as a consumer?
Personalized ads are no longer based on a person’s ethnicity, religion or sexual orientation. In addition, the major platforms that work with algorithm-based recommendations, such as YouTube, Netflix and Meta (Facebook), will be required to provide transparency about how they work once the DSA is implemented. This includes the ability for users to have the choice of seeing these posts in chronological order.
In addition, the introduction of the Digital Service Act also aims to make it easier for consumers to seek justice if necessary, such as in the case of scams. This is to be achieved through stricter regulations and controls regarding online marketplaces.
What does this mean for your online business or website?
Online marketplaces must request more information about the buyers and sellers of products or services through the platform. This should ensure greater fairness and equity for both providers and consumers. Thus, the DSA aims to eliminate unfair competition and make it easier for consumers to seek justice.
Distinction between platforms and ‘very large platforms’
Remarkably, the Digital Service Act makes a distinction for “very large platforms. This includes platforms with more than 45 million users in the EU. These very large platforms include a small group, which are mostly social media platforms.
The very large platforms are subject to more obligations in terms of transparency, moderation of content and procedural rules. These platforms must also have a mandatory audit conducted every year.
The European Commission justifies this distinction by the fact that these very large platforms have the responsibility to carry out these obligations and are financially able to do so. In doing so, because of their size, these platforms can have a significant impact on the very illegal business that the DSA is intended to combat.
When will the Digital Service Act (DSA) go into effect?
The current expectation is that the Digital Service Act will go into effect January 2024. For this, it is important that all European member states have agreed. The implementation of the DSA will be incremental, which should allow enough time for Internet companies to comply with the new regulations.
Failure to comply with the new regulations, after the DSA takes effect, will be fined. In doing so, fines can be as high as 6 percent of global sales.
Summary: The Digital Service Act (DSA).
- With the Digital Service Act, Europe is trying to get a grip on illegal content on online platforms, end the dominance of large platforms and protect consumers.
- The DSA distinguishes between ordinary platforms and “very large platforms,” with the very large platforms having more obligations because they also bear more responsibility.
- Openness and transparency is a key point of the DSA. The operation of algorithms should no longer be kept secret and a third party, in the form of a regulator, should be able to watch online activities at all times.
- It must become easier for consumers to seek justice. For this, there will be stricter rules for online marketplaces. KYC obligations are the new standard and anonymous marketplaces are banned.
- Failure to comply with the new legislation could result in a fine of up to 6 percent of global annual sales.
Does the Digital Service Act (DSA) affect my website or organization?
Wondering to what extent the Digital Service Act will impact your organization or website? If so, please feel free to contact us!