Let's talk about DIGITAL SERVICE ACT

…and how it will change the behavior of those who provide digital services

The European Council adopted, in September 2022, the final form of the Digital Services Act ("DSA") and the Digital Markets Act ("DMA") as a result of a previous agreement with the European Parliament.

As set forth by art. 1 of the DSA proposal, the Regulation introduces a horizontal framework applicable to all intermediary services.

What is Digital Service Act (“DSA”)? 

If until recently, the E-commerce Directive dictated the rules for the provision of digital services in the EU, lately the needs of users, but also SMEs, start-ups, and small platforms, have changed considerably.

This is how DSA appeared, which, together with DMA, focuses on safety,  fundamental rights, and fair competition in digital environments. 

If you are wondering if the DSA also applies to companies registered outside the EU, the answer is YES. The new regulations are intended for the EU single market, including those companies that are established outside the European space but offer their services in the single market.

The extended protection of European citizens - users.

Since online platforms are already an integral part of the daily life of Europeans, the new regulations are intended to create a safer online experience for them, in which they can express themselves freely, communicate and shop online through reduced exposure to illegal goods, dangerous activities, and protection of fundamental rights.

DSA will regulate all types of advertising.

As stated in Article 24 of the DSA proposal, ‘’online platforms that display advertising on their online interfaces shall ensure that the recipients of the service can identify, for each specific advertisement displayed to each individual recipient, in a clear and unambiguous manner and in real time:

(a)that the information displayed is an advertisement;

(b)the natural or legal person on whose behalf the advertisement is displayed;

(c)meaningful information about the main parameters used to determine the recipient to whom the advertisement is displayed.’’

From digital marketing to issue-based advertising and political ads, the DSA will complement existing rules such as the General Data Protection Regulation.

Two new restrictions regarding targeted advertising on online platforms:

• Targeted advertising of minors based on profiling will be prohibited;

• Profiling targeting advertising using special categories of personal data, such as sexual or religious orientation, will not be allowed.

Users will be informed if and why ads target them and who paid for them.

The stakes are also higher for large platforms, and the rules are even stricter for them. Among other things, they will provide access to the ad repositories, allowing researchers, civil society, and authorities to inspect how the ads were displayed and targeted. They will evaluate if and how they are manipulated in their advertising systems and will ensure that they do not contribute to social risks, taking measures to mitigate them.

The rules are complemented by measures in the ("DMA") Digital Markets Act, which address economic concerns related to gatekeepers' advertising models.

Dark patterns are now strictly prohibited.

Under the new regulations, online platform providers will not design, organize or operate their online interfaces in any way that deceives, manipulates, or in any other way affects users' decisions.

The focus of DSA will be on the tech giants and, in general, on extensive online platforms that reach at least 45 million European users. However, specific due diligence obligations also apply to hosting services and other online platforms such as social networks, content sharing platforms, app stores, online marketplaces, and online travel and accommodation platforms.