European Union has published its Digital Services Act (DSA) package on 15 December, 2020

In the recent past, many countries have been trying to impose new rules, and sometimes, even laws to regulate online content and the stand of technology companies. European Union is always at the forefront of combating fake and misinformation. As a step further, the commission has initiated an act named the 'Digital Services Act' to impose stricter restrictions on internet intermediaries and digital platforms. The act mandates the implementation of a virtual complaint system, setting yearly reporting requirements, and threatening fines.

European Union has published its Digital Services Act (DSA) package on 15 December, 2020. The package has two proposed legislations namely Digital Services Tax and Digital Markets Act. The move was put forth to profoundly change the way companies offer and use digital services in the EU nations. It directly impacts all technology companies that stand as 'gatekeepers.' The DSA seeks to consolidate various separate pieces of EU legislature and self-regulatory practices that address online illegal or harmful content. Besides, the act is expected to establish a level playing field to foster innovation, growth, and competitiveness, both in European Single Market and globally. These regulations come as a step ahead to shape European digital future strategy, which seeks to create a new regulatory framework to govern technology companies.

What is Digital Services Act (DSA)?

The Digital Services Act is ruled out to moderate content and online advertisements on digital platforms. By imposing the move on technology companies, it leverages a space to regulate online intermediaries such as online marketplaces, social networks, content-sharing platforms, app stores as well as online travel and accommodation services. Earlier in 2000, the European Union has passed an E-commerce directive. The e-commerce directive had only limited capacity to create consistent, cross-border supervision of online intermediaries. But as years passed and technology in digital platforms evolved, the need to extend protection pressed the officials to adopt a more stringent law. In addition, European Parliament has also proposed a package of additional tech policy legislation to address the shortcoming requesting algorithm disclosure, reporting, and transparency. To make the efforts worthy and streamline regulations, the body has come up with Digital Services Act to expand its perspective in tech and innovation.

Who are covered in the act?

In general, digital services include a large category of online services starting from simple websites to internet infrastructure services and digital platforms. The Digital Services Act also includes rules for online intermediaries which millions of Europeans use every day. The role, size, and obligation of the online players reflect on the kind of rules they should abide by. Henceforth, let's have a look at how the service providers are divided.

• Intermediary services- Intermediary services are platforms that offer network infrastructure. It includes internet access providers, domain name registrars, etc.

• Hosting services- Ever since the beginning of the pandemic, hosting services like cloud and Webhosting are becoming a part of regulatory reforms.

• Online platforms- Online marketplaces or app stores that gather sellers and consumers at a place fall under online platforms. There are collaborative economy platforms and social media platforms.

• Tech conglomerates- Very large online platforms that have over 10% of 450 million consumers in Europe pose particular risks in the dissemination of illegal content and societal harms.

What are the provisions of the act?

Illegal or potentially illegal and harmful content is taking over online space in recent times. At a period when people are using digital platforms 24×7, it is the role of the government body to modernize and create a unified framework that addresses all the pain points. Besides, data protection is also becoming a major part of users' fundamental rights online and bridging the information asymmetries between online intermediaries and their users. Digital Services Act came to effect at a time when all these concepts were turning to be more critical.

Some of the main provisions of the act are as follows,

• Digital Services Act has modernized liabilities for online intermediaries. The framework has added more obligations to address notifications of content considered illegal. According to the act, online service and hosting providers are asked to allow notification of illegal content.

• The act regulates the amount of data online intermediaries secure while new users or existing users avail the service with reference to the content moderation mechanisms applied, algorithmic decision-making, and human review.

• The act makes Know Your Customer procedure the center of online platforms that deal with distant traders and consumers. It ensures that traders can only offer goods and services via online portals after knowing the customer.

• Online advertisements are under strict regulations with extensive rules applied. The act mandates users to get real-time, unambiguous information on whose behalf the ad is displayed, what meaningful information it provides, etc.

• The framework mandates steep fines like over 6% of the annual income or turnover to be paid to the European Unionin case online platforms don't abide by the regulations of the Digital Services Act.

The downside

Digital Services Act has a provision called notice and action mechanism that stops technology companies from taking immediate action against politicians like how Twitter and Facebook decided to suspend former US President Donald Trump's account during Capitol violence. The framework effectively empowers hosting providers to make decisions about the legality of content upon the recipient of a substantiated notice of alleged illegality.