Effective November 16, 2022, the European Union (EU) introduced the Digital Services Act (DSA), which has set the stage for global digital service regulation advancements.
The DSA introduces new rules for "online intermediaries," including online marketplaces, social media platforms, and internet service providers. Its primary purpose is to stimulate market expansion while simultaneously ensuring clarity and transparency for the responsibilities held by digital platforms.
Although the DSA has been operational for almost eight months, the European Parliament has granted a transition phase, culminating on February 17, 2024. By this date, organizations are required to have the necessary processes in place to comply with DSA's stipulations.
Scope of Coverage
The enactment of the DSA brings new regulatory obligations for providers of online intermediary services. As defined by the European Parliament, these providers ("Providers") include all entities offering information society services — services rendered in exchange for compensation following a request initiated by a consumer. Specifically, the DSA's scope encompasses Providers that:
Act as a simple intermediary for information and/or access, including telecommunications service providers;
Store or host information to make it available to users and/or third parties, including app stores, content-sharing platforms, and online travel and accommodation platforms; or
Offer permanent storage of information, such as cloud services.
Obligations Under the DSA
The DSA outlines responsibilities for Providers to foster a transparent and trustworthy digital space. Under the DSA, Providers must:
Produce and publish annual transparency reports on content moderation efforts, including the steps taken to enforce terms and conditions;
Collaborate with national authorities when instructed, such as by promptly informing the relevant supervisory body about actions taken in response to orders;
Prominently display clear terms and conditions for content moderation practices and provide easily accessible information on the right to terminate service usage; and
Designate a single electronic point of contact for formal communication with EU supervisory authorities, even if the Provider is based outside the EU.
The DSA imposes tiered obligations based on the Provider's size and the type of services offered. All online platform and online engine providers, except those qualifying as small and micro platforms per Commission Recommendation 2003/361/EC, were mandated to disclose their active user numbers on their websites by February 17, 2023, and to update this data every six months after that.
The European Commission encouraged Providers to share these figures with the Commission to aid in the category classification process. There are four categories:
Intermediary service providers (a broad category further subdivided into internet access providers, domain name registrars, and the three sub-categories below);
Hosting services (e.g., cloud services storing user information);
Online platforms or Providers connecting sellers and consumers (e.g., Social media platforms); and
Very Large Online Platforms (VLOPs) and Very Large Online Search Engines (VLOSEs), both defined as platforms or search engines with over 45 million active monthly users in the EU.
On April 25, 2023, the Commission released its first category designations and outlined subsequent steps for designated VLOPs and VLOSEs. Depending on category designation, extra obligations range from Providers reporting criminal offenses to national law enforcement or judicial authorities to annual risk assessments for VLOPs and VLOSEs.
When implementing the DSA, Member States may need help interpreting their definition of illegal content, as the prevailing rule in the EU is that content deemed illegal in a specific Member State "should only be removed within the territory where it is illegal.
Ensure your compliance in the digital world, both in the EU and globally, with Prokopiev Law Group. With our extensive global network of partners, we are poised to assist you in navigating the complexities of the DSA and other regulatory frameworks worldwide. We offer expert guidance and support if you need more information on the DSA, help with compliance or any other inquiries. Reach out to us today for trusted, comprehensive legal assistance.
The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.
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