Digital Services Act: Europe All Set
The eCommerce rules would apply to all digital platforms and businesses starting Feb 17
At a time when the rest of the world is debating the power of digital transformation and its impact and challenges on online businesses, the European Union has set in motion a set of rules that apply to all eCommerce platforms starting on February 17. Thus, all digital businesses will now fall under the purview of the new online governance framework.
The Digital Services Act (DSA) aims to use transparency obligations as a tool to monitor and manage both illegal content as well as products off the regional internet. For example, platforms cannot sell products or services marked illegal such as guns in the region. Additionally, social media sites will be obligated to curb hate speeches in case partner countries prohibit it.
Illegal products, hate speeches and kids security
If illegal products and services and hate speeches are top priorities, following close behind is the protection of minors through a high level of privacy, security and safety for kids on the platforms operating in the region. The rules also ban use of kids data for targeting ads, something most platforms are known to do as a means to reach the parents.
Of course, there is little clarity on the number of digital platforms that would be subject to the new regulations given their unbridled growth, but the fact remains that businesses and other in-scope digital service providers will end up forking out 6% of their annual turnover if they fail to comply with the regulations.
Another facet of the rebooted rules is the obligations of hosting services and intermediaries such as ISPs, domain registers and network providers. There is some leeway given to what the rules describe as “micro” enterprises that have fewer than 50 employees and an annual turnover of less than 10 million Euros.
However, they will need to set clear and precise terms and conditions and provide a contact point for authorities. Even those startups scaling at a good pace are exempt from general rules for now and get a targeted exemption for some DSA provisions over a 12-month transition period. As for in-scope companies, they have a year to get their compliance plans in place.
What changes and what are the challenges?
An immediate change that could take place relates to the rules around video sharing platforms where some of them could be forced to switch off content that are based on user profiles in some local markets. For example, the number of platforms located in Ireland could cause the likes of Meta, TikTok and X among others to reconsider their strategies.
Experts believe another change and challenge around the DSA could relate to GenAI tools, especially the likes of ChatGPT that came into being after the laws were drafted. The intent of the regulation was future proofing of technologies and being able to apply them to new types of platforms and services as they come up.
Reports suggest that the Commission itself was aware of two situations on GenAI tools – the first where VLOP embeds AI into an in-scope platform where the DSA applies and the other relates to standalone AI tools not embedded but already identified as in-scope. The challenge here is to map the AI tech as a platform or a search engine based on regulatory definitions.
According to the commission, standalone AI tools that meet the DSA definition of a platform or a search engine and also pass the 45 million threshold of monthly users could also be designated as VLOPs / VLOSEs. This means the DSA’s extra algorithmic transparency and systemic risks rules would apply and the commission would be responsible for oversight and enforcement.
