EU’s Digital Services Act: What You Need to Know

What Is the Digital Services Act?

The Digital Services Act, or DSA, is legislation recently agreed upon by the European Commission and EU Member States. It provides a regulatory framework that imposes rules around how online platforms advertise, moderate content, and use algorithmic processes.

According to the European Commission, the DSA has two main goals:

• “to create a safer digital space in which the fundamental rights of all users of all digital services are protected, and
• to establish a level playing field to foster innovation, growth, and competitiveness, both in the European Single Market and globally.”

How Does the DSA Affect Businesses?

When the DSA goes into effect, it will have a significant impact on every online platform doing business in the EU, including social networks, search engines, and online marketplaces.

Not only will the European Commission and EU Member States have greater oversight into business processes, but online platforms will be obligated to comply with strict regulations, such as:

• Validation and prevention: Online marketplaces will be charged with validating merchants that list products or services for sale on their websites and put measures into place that prevent illegal products and services from being listed for sale.
• Immediate takedown: Platforms that display content targeting cyber victims must be taken down immediately.
• Algorithm access: The DSA requires Very Large Online Platforms (VLOPs) to allow access to their algorithms, for the European Commission and EU Member States to monitor and assess compliance. VLOPs are sites with more than 45 million active monthly users.
• Recommendation system disclosure and modifications: Online platforms must clearly describe their recommendation systems in their organization’s Terms and Conditions. In addition, the platform must also allow users to modify the parameters used in recommendation systems.
• Moderate links to illegal content: Search engine operators, specifically, will be required to delink any links that leader users to illegal content.

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The Digital Services Act applies to service providers, online platforms, and Very Large Online Platforms (VLOPs), including:

• Online marketplaces
• Social networks
• Content-sharing platforms
• App stores
• Collaborative economy platforms
• Internet providers
• Domain registrars
• Cloud and web hosting services
• Online travel sites
• Accommodation platforms

Essentially, any online platform doing business in the EU will be subject to these new rules when they go into place.

When Does the DSA Go Into Effect?

Once the DSA is officially adopted by European Union co-legislators, online platforms will have to comply within 15 months or by January 1, 2024, whichever comes first.

The companies designated as VLOPs will be required to comply earlier than that, just four months after being officially adopted.

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