Digital Services Act: EU takes decisive step closer to introducing global-first rules for digital services
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Europe's plans to introduce sweeping new rules and obligations for online service providers took another decisive step forward on 31 January, with the start of three-way negotiations between the EU institutions to reach an agreement on the proposed Digital Services Act (DSA). These "trilogue" negotiations between the European Commission, European Parliament and Council are set to take place on a regular basis until consensus on a final text is achieved. The current French Presidency of the EU is presiding over these meetings. With the national French Presidential elections due in April and digital regulation high on the political agenda, France is pushing strongly to reach an agreement on a final text by June 2022, before the end of its EU Presidency. However, this remains a very ambitious agenda, and discussions may well continue into the second half of 2022, under the forthcoming Czech Presidency of the EU.
To recall, the DSA proposal was tabled by the European Commission on 15 December 2020 and includes a set of binding new rules designed to protect consumers from illegal content and products online. This includes the introduction of content moderation obligations for service providers, new notice-and-action procedures for faster removal of illegal content, rules regarding the traceability of online traders, as well as transparency with respect to targeted online advertising and recommender systems. Under the new regulation, very large online platforms ("VLOPs") would also be subject to more stringent due diligence obligations, including mandatory risk assessments, since they are considered to pose specific risks regarding the dissemination of illegal content in the digital environment.
Furthermore, the DSA will have an extra-territorial effect, meaning it will apply to companies headquartered outside the 27 Member States, so long as they target EU consumers. In this way, the EU has revealed its high ambitions to introduce a new standard for the governance of digital services, in the same way that the General Data Protection Regulation (GDPR) has become a global norm.
The recent start of the trilogue negotiations on the DSA follows the adoption by both the European Parliament and Council of their respective positions on the proposal. While the Council reached its “general approach” in November 2021, the European Parliament just adopted its DSA Report on 20 January 2021. The Parliament's plenary session voted to adopt the report by the Danish Social-democratic MEP, Christel Schaldemose, by 530 votes in favour to 78 against, with 80 abstentions. She is now representing the Parliament's position during the trilogue negotiations.
According to Mrs Schaldemose, the Parliament's discussions were guided by the principle that "what is illegal offline should be illegal online". Significantly, the Parliament introduced a number of new elements compared to the Commission's original proposal. The Council position has also placed some new amendments on the table. During the trilogue meetings, all these proposed changes to the proposal will have to be discussed and either agreed, changed or rejected before a final compromise agreement between the EU institutions can be reached.
Notable amendments introduced by the Parliament include:
- Targeted advertising: more obligations aimed at ensuring a transparent and informed choice for recipients of digital services, including information on how their data will be monetised. Refusing consent to be tracked should be no more difficult or time-consuming for the users than giving consent. Users should also be given options to access the online platform based on tracking-free advertising.
- Minors and vulnerable groups: the text provides for a ban on the use of targeting or amplification techniques involving the data of minors for the purpose of displaying ads. It would also be prohibited to target individuals based on special categories of data that allow for the targeting of vulnerable groups.
- Recommender systems: users should have more choice regarding recommender systems based on algorithms and used to promote or rank certain content or products.
- Anonymity: a new provision was introduced on the right to use and pay for digital services anonymously, in accordance with the principle of data minimisation and to prevent unauthorised disclosure, identity threat and other forms of abuse of personal data.
- Compensation: recipients of digital services and organisations representing them must be able to seek redress for any damages resulting from platforms not respecting their due diligence obligations.
- Dark patterns: online platforms would be prohibited from using deceptive or nudging techniques to influence users’ behaviour.
- Waiver for SMEs: the text also proposes an exemption for micro, small and medium-sized enterprises (SMEs) from certain DSA obligations. SMEs are deemed to be enterprises that employ fewer than 250 persons with an annual turnover not exceeding €50 million and/or an annual balance sheet total not exceeding €43 million.
Next steps
The next trilogue meetings on the DSA between the European Parliament, Council and Commission are currently scheduled for 15 February, 15 March and during the week of 4 April.
For further information contact Francine Cunningham
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