The European Union’s revised e-commerce regulations are set to take effect tomorrow, imposing new legal responsibilities on digital platforms and businesses in scope.
The Digital Services Act (DSA) is a significant effort by the EU to establish an online governance framework for platforms, introducing transparency obligations to remove illegal content and products from the regional internet.
The basic idea is that if something is illegal in a particular Member State, it should not be possible to circumvent the law by using the internet. Therefore, online marketplaces in Europe should not facilitate the buying and selling of banned items, such as weapons or hate speech, in compliance with local regulations.
Protection of minors is another important aspect, with the regulation requiring platforms and services to ensure a high level of privacy, safety, and security for children and prohibiting the use of their data for targeted ads.
Although the exact number of companies subject to the rules is unknown, the EU expects at least a thousand entities to be impacted. Penalties for non-compliance can be severe, reaching up to 6% of the company’s global annual turnover for confirmed breaches.
The DSA also imposes obligations on hosting services and other online intermediaries, as well as exemptions for smaller platforms and startups that do not meet certain criteria.
Large tech platforms and marketplaces face even stricter regulations, with additional compliance deadlines and requirements. These include algorithmic transparency, content reporting tools, and other obligations to ensure compliance with the DSA.
Digital Services Coordinators
Digital Services Coordinators (DSCs) at the Member State level will oversee the enforcement of the general DSA rules, ensuring that tech giants comply with the obligations. Regulations will be enforced by authorities located in the countries where the platforms are established, with existing regulatory agencies and competition authorities playing a substantial role as DSCs.
The EU has established a webpage to find the DSCs appointed by each Member State, although not all appointments have been made at this time.
DSCs will also serve as points of contact for citizens’ complaints related to the DSA, and consumers have the option of pursuing collective redress litigation if a company fails to respect their rights under the Act. The regulation establishes a significant layer of regulatory oversight that will influence digital businesses in the region.
Changes and Challenges
With the full application of the DSA regime, new regulatory experiments and interesting challenges are expected, including the potential impact on video sharing platforms and generative AI tools. The DSA was designed to be future-proof and applicable to new types of platforms and services.
Regarding generative AI tools, the DSA enforcers will assess whether standalone AI tools meet the definition of a platform or search engine and should comply with the regulations. The incoming AI Act will also play a role in determining the boundaries for such tools, indicating the increasing complexity and challenges that digital businesses will face in the region.
Overall, the DSA represents a comprehensive effort to regulate online activity within the EU, introducing a wide range of new obligations and a network of enforcers, which will impact platforms, services, and businesses operating in the region.
