EU reaches consensus on Digital Services Act - your move, Big Tech!

Stuart Lauchlan Profile picture for user slauchlan April 26, 2022 Audio mode
Summary:
The EU looks set to push the Digital Services Act through. What are the implications for Big Tech?

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It’s a major development that could alter the entire social media landscape. No, not Elon Musk and Twitter; the European Union’s latest bid to ‘tame’ Big Tech with its Digital Services Act (DSA).

The Act, against which all the ‘usual suspects’ had been lobbying frantically, found consensus among the European Parliament and EU member states over the weekend. It took 16 hours of talks and “lots of sweets” according to EVP for a Europe Fit for the Digital Age, Margrethe Vestager, but it was worth the effort:

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European Commission President Ursula von der Leyen stated: 

Today’s agreement on the Digital Services Act is historic, both in terms of speed and of substance. The DSA will upgrade the ground-rules for all online services in the EU. It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses. It gives practical effect to the principle that what is illegal offline, should be illegal online. The greater the size, the greater the responsibilities of online platforms. Today’s agreement – complementing the political agreement on the Digital Markets Act last month – sends a strong signal: to all Europeans, to all EU businesses, and to our international counterparts.

So what's in it? 

Now the Act has political approval, it still needs to pass through the European Parliament and Council, but in reality it’s as good as a done deal can be. So who does it impact? There are a number of key targets:

  • Intermediary services offering network infrastructure: Internet access providers, domain name registrars.
  • Hosting services, such as cloud computing providers and web-hosting services.
  • Online platforms bringing together sellers and consumers, including online marketplaces, app stores, collaborative economy platforms and social media platforms.  
  • Very large online platforms, which will have specific rules for those reaching more than 10% of 450 million consumers in Europe. Micro and small enterprises with under 45 million monthly active users in the EU will be exempt from some of the new obligations

The DSA rules include:

  • Banning advertising targeted at children or based on sensitive information such as religion, gender, race, or political beliefs.
  • The removal at government request of illegal materials that supports terrorism, child sexual abuse, hate speech, and commercial frauds.
  • Allowing social media users to flag illegal content in a “simple and effective” manner so that it can be removed quickly.
  • Social media platforms would have to ban users who repeatedly publish illegal content.
  • Platforms will also be required to be transparent and ensure that their algorithms and AI tools are auditable by regulators.

For non-EU organizations, the Act will bring new responsibilities/burdens - delete as applicable. According to the Commission:

[The rules]  apply in the EU single market, without discrimination, including to those online intermediaries established outside of the European Union that offer their services in the single market. When not established in the EU, they will have to appoint a legal representative, as many companies already do as part of their obligations in other legal instruments. At the same time, online intermediaries will also benefit from the legal clarity of the liability exemptions and from a single set of rules when providing their services in the EU.

What that means in practice is that transgressors face fines of up to six percent of global turnover with an ultimate sanction for multiple breaches of being banned from doing business within the EU.

If everything proceeds as planned, the Digital Services Act will be enforced from 2024.

My take

As ever in these matters, no-one is going to be entirely satisfied with what’s been agreed here. On the one hand, there will be those who argue that the Act doesn’t go far enough in clamping down on Big Tech, while at the other extreme, free speech and digital rights campaigners will complain that it restricts freedom of expression etc etc.

So it’s a compromise that’s on the table, although one seemingly with enough teeth to be chalked up as failure for Silicon Valley lobbying in Brussels. The test will come when those teeth are used to bite, of course. The Commission has shown its willingness to be tough on enforcing fines against tech firms - €8.2B in fines against Google alone to date. Who will be first to put the DSA to the test remains to be seen. But as Amnesty International noted in a statement:

It is now crucial that the DSA is robustly enforced so that it does not turn into a mere paper tiger. It is also vital that other jurisdictions around the world follow suit and adopt strong laws to further protect people from the harms caused by Big Tech’s surveillance-based business models.

Whether that last point comes to pass very much remains to be seen. Some US political figures gave the Act the thumbs up:

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But at the same time, those on the right who’ve spent the past 24 hours convincing themselves that Elon Musk to be the savior of free speech are unlikely to welcome yet more regulatory burdens imposed by uppity Europeans. And Big Tech’s lobbyists will be shifting gear to focus on preventing other countries taking on board similar rules. Google has come out with a bland ‘we’ll work with policy makers’ on the new regulations. Meta, Amazon et al remain conspicuously/ominously silent.

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