The story so far: The European Union (EU) member states and the European Parliament on April 23 secured a landmark agreement to tackle harmful content online through the Digital Services Act. The European Commission (EC), the executive arm of the EU, had proposed the Digital Services Act and the Digital Markets Act in December 2020 in order to “protect consumers and their fundamental rights online”.
“The Digital Services Act will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses,” EU President Ursula von der Leyen said.
What is the Digital Services Act?
The Digital Services Act aims to tackle hate speech, disinformation, and other harmful and illegal content online, making technology companies more accountable for the content created by users. Failure to police content by tech companies can potentially lead to fines running into billions of dollars.
Under the Digital Services Act, tech companies will be required to limit the use of personal data for targeted advertising based on ethnicity, political views, or sexual orientation, and provide a mechanism for users to flag illegal content and for platforms to cooperate with “trusted flaggers”. The agreement also empowers users by providing them with enhanced opportunities to challenge content moderation decisions, and transparency measures like information on algorithms used for recommending content or products to users. Tech companies will be obligated to set up procedures that can swiftly adapt to crises related to public security and public health, and use newer safeguards for the protection of minors.
The EC consulted a wide range of stakeholders, including the private sector, users of digital services, civil society organisations, national authorities, academia, technical community, international organisations and the general public, to formulate the agreement.
The political agreement is now subject to formal approval by the two co-legislators – the European Parliament and the Council of the EU.
The Digital Services Act is likely to come into force as early as 2024.
What are digital services covered in the agreement?
Digital services cover a large variety of online services, including online marketplaces, social networks, content-sharing platforms, app stores, and online travel and accommodation platforms.
The agreement divides internet providers into four broad categories:
- Intermediary services that offer network infrastructure like internet access providers and domain name registrars
- Hosting services like cloud computing
- Online platforms including marketplaces, app stores, and social media
- Very large online platforms, with a reach of more than 10% of the 450 million consumers in the EU.
What will be the impact of this Act on Big Tech?
Under the new law, very large online platforms will be under enhanced supervision and enforcement by the Commission. Internet companies will also have to provide access to their key data to vetted researchers. Very large online platforms and very large search engines will be obligated to prevent the misuse or manipulation of their systems by taking risk-based actions. They will also have to undergo independent audits of their risk management systems.
“The Digital Services Act entrusts the Commission with supervising very large platforms, including the possibility to impose effective and dissuasive sanctions of up to 6% of global turnover or even a ban on operating in the EU single market in case of repeated serious breaches,” Commissioner for the Internal Market Thierry Breton said.
The Digital Services Act will also favour a fair and open environment online at a time when a few large players have emerged as gatekeepers and control important ecosystems in the digital economy. Such very large companies can potentially act as private rule makers, thus creating unfair conditions for businesses and fewer choices for users.
“We welcome the Digital Services Act’s goals of making the internet even safer, transparent and accountable, while ensuring that European users, creators and businesses continue to benefit from the open web. As the law is finalised and implemented, the details will matter. We look forward to working with policymakers to get the remaining technical details right to ensure the law works for everyone,” Google spokesperson said.
With the General Data Protection Regulation (GDPR) in 2018 and now the Digital Services Act, Europe is emerging as a leader of user rights against tech companies. While it might be expected that the new law will inspire other countries too to adopt similar measures, tech companies are likely to push back on clauses like targeted advertising which is a major source of revenue.
