In the early hours of the morning, European Union lawmakers secured a deal on a landmark update to rules for digital services operating in the region, grabbing political agreement after a final late night/ early morning of compromise talks on the detail of what is a major retooling of the rules.
The Digital Services Act will likely enter into force later this year after the political agreement on it. Although the rules won't start to apply until 15 months after that, there is a long lead in time for companies to adapt.
There is a wide range of rules set out to harmonize to speed up the removal of illegal content and products. It addresses a grab-bag of consumer protection and privacy concerns, as well as introducing algorithmic accountability requirements for large platforms to dial up societal accountability around their services. The same requirements are intended for online marketplaces.
The legislation that was agreed today goes further than the Commission proposal in a number of areas, with the European Parliament pushing to add in limits on tracking-based advertising.
A full blanket ban on all types of digital service is included in the final text, but not the prohibition on the use of dark patterns for online platforms.
Below is a breakdown of what we know so far.
The DSA was presented as a draft proposal by the Commission in December 2020 and has taken 16 months of discussion in the other branches of the EU.
EU policy watchers may be forgiven for a little euphoria after last month's deal on the Digital Markets Act, which targets the most powerful intermediating platforms with an ex ante, pro-competition regime.
Big Tech's lobbying of the EU in monetary terms has been unprecedented. According to a report published earlier today by Corporate Europe Observatory, giants like Google have sought to insert themselves into the last mile stage of discussions where EU institutions are supposed to shut themselves off from external pressures to reach a compromise. That shows what they believe is at stake.
The full impact of the lobbying will not be known for months or even years. The EU is spared from an embarrassing repeat of the ePrivacy update because Big Tech's lobbyists were not successful in blocking the passage of the two major digital regulations. Big Tech's promises are not as popular as they used to be.
The goal for the DSA has always been to make sure that what is illegal offline will be illegal online. Margrethe Vestager, an executive vice president, said in a video message that illegal offline should also be seen and dealt with.
She said that it is a real thing.
Commission president Ursula von der Leyen made a statement.
“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.”
The DSA is a world first in the field of digital regulation.
The parliament said that the landmark rules effectively tackle the spread of illegal content online and protect people's fundamental rights in the digital sphere.
The DSA will set new global standards and citizens will have better control over how their data is used, according to the statement. It has been made clear that what is illegal offline is also illegal online. The European Parliament has additional obligations on transparency. The new rules guarantee more choice for users and new obligations for platforms on targeted ads, as well as banning the targeting of children.
The DSA is being dubbed a European constitution for the internet by other EU lawmakers. The gap between the EU and the US on comprehensive digital lawmaking is growing.
Earlier this week, Hillary Clinton encouraged Europe to get the DSA across the line and to kill global democracy. The EU is going to do something about it.
The parliament and Council have provided an overview of areas of key elements of the regulation they have agreed on.
The full and final text hasn't been published yet and won't be for a while. The full detail of the regulation and the implication of all its nuances remains tBC, because it is pending legal checks and translation into the bloc's many languages.
This is an overview of what we know so far.
Scope, supervision and penalties.
The DSA will apply to all online service providers in the EU.
The number of users and the nature of the services are intended to be taken into account when determining the regulation's obligations.
Services with more than 45 million monthly active users in the EU will be considered VLOSEs. There will be many services that reach that bar, including the local music streaming giant.
Micro and small enterprises with under 45 million monthly active users in the EU will be exempt from certain regulations.
The Commission will be responsible for supervision of the obligations that are specific to them, which is intended to avoid bottlenecks in oversight and enforcement of larger platforms.
The country-of-origin principle is baked into existing digital rules and so national agencies at the Member State level will supervise the wider scope of the DSA.
Penalties for violating the DSA can be as high as 6 percent of global annual turnover.
There will be a right for recipients of digital services to seek compensation for any damages or loss they suffer due to platforms.
Content and marketplace rules.
Content moderation measures are focused on removing illegal content.
Users will be able to report illegal content online through the procedure described by the parliament.
It flags support for victims of cyber violence, who it says will be better protected against non-consensual sharing.
The risk of over-removal of content from the regulation puts pressure on platforms to act quickly through stronger safeguards to ensure notices are processed in a non-arbitrary and non-discriminatory manner and with respect for fundamental rights.
The regulation is intended to ensure swift removal of illegal products from online marketplaces. There are new requirements for players of the internet.
The DSA will impose a duty of care on marketplaces for sellers who sell products or services on their online platforms, according to the Council.
Marketplaces will have to collect and display information on the products and services sold in order to ensure that consumers are properly informed.
The parliament says that marketplaces will have to ensure that consumers can purchase safe products or services online by strengthening checks to prove that the information provided by traders is reliable.
EU lawmakers seem to have listened to the concerns of consumer protection organizations, who had pushed for random checks on traders.
There are extra obligations for VLOSEs.
The European Commission and Member State agencies will have access to the algorithms of the larger platform entities, which will face scrutiny.
The DSA requires large digital platforms and services to analyse systemic risks they create and to carry out risk reduction analysis.
The Council suggests that the analysis should be done annually, so that it can allow for monitoring of and reduced risks in areas such as the dissemination of illegal content, adverse effects on fundamental rights, and manipulation of services having an impact on democratic processes and public security.
Each year, the parliament will conduct independent audits of the VLOPs/VLOSEs.
Large platforms that userecommender systems to determine what content users see will have to provide at least one option that is not based on profiling. Many already do so, and they often undermine these choices by applying dark pattern techniques to make users switch to another feed, soholistic supervision will be needed to meaningfully improve user agency.
There will be transparency requirements for the parameters of the recommender systems with the goal of improving information for users and any choices they make. The detail will be interesting.
There are limits on targeted advertising.
The restrictions on tracking-based advertising appear to have survived the trilogue process, with all sides agreeing on a ban on processing data for targeted ads.
The Council says this applies to platforms accessible to minor users.
Platforms will not be allowed to present targeted advertising based on the use of personal data as defined in EU law.
According to our sources, the DSA will require providers of online platforms to not do profile based advertising when they are aware that the recipient of the service is a minor.
There is a restriction on the use of sensitive data for targets ads in the text.
Targeted advertising is banned when it comes to sensitive data, according to the parliament.
Inside a European push to outlaw creepy ads
Providers of online platforms shall not present advertising to recipients of the service based on profiling within the meaning of the regulation.
Any form of automated processing of personal data consisting of the use of personal data to evaluate certain personal aspects relating to a natural person is defined by the article.
Special category data includes personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, as well as health data, data on sex life and/or sexual orientation.
The DSA has a hard ban on targeting ads based on tracking or inferring sensitive interests.
There is a ban on the use of dark patterns.
There was a prohibition on dark patterns in the text. We understand that this only applies to online platforms, so it doesn't look like a blanket ban on all digital services.
That is unfortunate. No matter the size of the business, unethical practices should not be accepted.
The parliament says that online platforms and marketplaces should not encourage people to use their services by giving more prominence to a particular choice or by urging the recipient to change their choice. It should be easy to cancel a subscription for a service.
Providers of online platforms shall not design, organize or operate their online interface in a way that deceives, manipulates or otherwise distorts or impairs the ability of the platform.
The Commission may issue guidance on specific practices, such as platforms giving more prominence to certain choices, and making it harder to end a service than sign up, according to the final compromise text. The effectiveness of the dark pattern ban depends on how much attention the Commission is willing to give to a massive online problem.
The dark pattern ban only applies to Intermediary services, according to the wording of the associated recital in the final compromise.
There is a crisis mechanism.
Following Russia's invasion of Ukraine, an entirely new article was added to the DSA, creating a crisis response mechanism which will give the Commission extra powers to scrutinize.
The EU's executive will be able to come up withportionate and effective measures to be put in place for the respect of fundamental rights.
The commission will use the mechanism if the board of national Digital Services coordinators recommends it.
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