European Commission announces consensus on Digital Services Act

On April 23, 2022, the European Commission announced that the European Parliament and EU Member States had reached consensus on the Digital Services Act (“DSA”), which sets accountability standards for online platforms. line regarding illegal and harmful content.

The DSA imposes obligations on covered entities based on their size, role and impact within the online ecosystem. Specifically, the DSA is directed to (1) service providers (covering intermediary services, conduits, caching, hosting, and network infrastructure services); (2) online platforms (such as app stores, online marketplaces, and social media platforms); and (3) what the DSA terms “Very Large Online Platforms” (“VLOPs”), defined as online platforms with more than 45 million active monthly users.

The final deal retains essentially the same features as the draft originally proposed in 2020, but European Council and European Parliament negotiators have agreed changes to the following requirements:

• Online marketplaces. To ensure the removal of illegal products and services from online marketplaces, marketplace operators must establish know-your-customer type protocols for merchants using their platforms. Operators must also use reasonable efforts, including random checks, to prevent illegal products and services from being offered for sale on their platforms.

• Immediate withdrawal. Content targeting victims of cyberviolence (for example, “revenge porn”) should be removed “immediately;” any other content deemed illegal should be removed “promptly”.

• Dark patterns. The DSA creates a qualified ban on the use of dark patterns, prohibiting online platforms from using dark patterns to manipulate user choices, unless they relate to practices permitted by the EU GDPR or the Unfair Commercial Practices Directive. The European Commission should issue guidance on the types of practices that constitute dark patterns under DSA.

• Responsibility of the algorithm. The DSA allows the European Commission and EU Member States to access the VLOP algorithms upon request and within a reasonable time if necessary to monitor and assess compliance with the DSA.

• Transparency and profiling. Platforms must clearly describe their recommender systems in the platform’s terms and conditions. Platforms should also allow users to change the settings used in recommender systems and should include at least one non-profiling based option.

• Supervisor fees by the Commission. VLOPs must pay the European Commission a monitoring fee of up to 0.05% of their global annual turnover to enforce the DSA.

• Integration of search engines. In addition to VLOPs, very large search engine operators fall separately under the DSA’s opt-out regime. Although these search engine operators cannot remove illegal content per se, they are required to remove from the list all links leading users to such illegal content.

And after?

The DSA will be forwarded to the European Parliament and EU Member States for final approval. Once approved, the DSA will enter into force 20 days after its publication in the Official Gazette. Online platforms will then have 15 months to comply with the legislation, which is expected to come into force in the first quarter of 2024.

The DSA completes another related bill, the Digital Markets (“DMA”) Act, which is also awaiting final approval. The European Commission, European Parliament and EU Member States reached a political agreement on AMD on March 22, 2022.