Digital Services Act - MEPs focus on content moderation and targeted advertising in wish list for new digital rules

By Francine Cunningham

05-2020

As the European Commission prepares to launch a consultation later this month on its forthcoming Digital Services Act (DSA), which will propose new rules for companies operating online, the European Parliament is preparing its own wish list for the legislation.

In a draft Report prepared for the Parliament's influential Legal Affairs Committee, the German MEP Tiemo Wölken (Socialists & Democrats group) notes the nature of digital business models, technologies and social realities have changed dramatically since the current legal framework for such services in the Internal Market was established in the year 2000. According to the rapporteur, this rapid evolution requires a comprehensive update of the rules and laws governing the provision of digital services in the EU.

Wölken believes that the Commission should use the DSA to limit the gathering of user data for targeted online advertising which he believes has contributed to the proliferation of "attention seeking and sensationalist" content designed to provoke emotions.

Furthermore, his draft Report suggests that the significant market power by dominant platforms has led to a situation in which “the winner takes it all”, and the market is composed of a small number of players each exerting market dominance over their competitors. Wölken believes that there is currently little regulatory oversight to address problems that may arise. The rapporteur recommends that the forthcoming Digital Service Act should propose curbs on targeted advertising, as well as binding standards and procedures for dealing with allegations of illegal content online.

Main recommendations include the following:

  • Content moderation: the DSA should strengthen the system of “notice and action” in response to allegations of illegal content by laying down a clear procedural framework and ensuring that such procedures allow for judicial redress. A European Agency should be set up to monitor and enforce compliance with contractual rights as regards content management and impose penalties for non-compliance. Platforms should send regular transparency reports. The draft report also takes a position against fully automated ex-ante controls of content;
  • Content curation, data and online advertisements: the draft report recommends that targeted advertising must be regulated more strictly and the DSA should set clear boundaries as regards the terms for accumulation of data for the purpose of targeted advertising, especially when data are tracked on third party websites. It also calls on the Commission to assess the possibility of defining fair contractual conditions to facilitate data sharing with the aim of addressing imbalances in market power and calls for content hosting platforms to give users the choice of whether to consent to the use of targeted advertising;
  • Smart contracts and blockchains: the draft report calls on the Commission to assess the development and use of distributed ledger technologies, including blockchain and in particular smart contracts in cross-border situations, and make proposals for the appropriate legal framework;
  • Private international law: the draft report suggests that the status of access rights to data under international law is uncertain. It emphasises the importance of ensuring that the use of digital services in the Union is fully governed by EU law.

The draft Report is now due to be voted in the Legal Affairs Committee in September. The Internal Market and Culture Committees are also providing Opinion Reports. While the text is non-binding, it is likely to provide a roadmap for the Commission by offering insight into what MEPs expect from the Digital Services Act, which is due to be launched at the end of this year or beginning of 2021.

For further information contact Francine Cunningham.