Digital Services Law | compliance

At the end of April 2022, the Council and the European Parliament reached a preliminary political agreement on the Digital Services Act. The legislative proposal is part of a comprehensive regulatory package for Internet platforms, which aims to combat the spread of illegal content and misinformation in the digital space and better protect the basic rights of users.

Create a digital service act

The European Commission is calling for a meaningful reform of the current EU legal framework for e-commerce. The previous basis is the “Directive 2000/31/EG on Electronic Commerce”, also known as the “Electronic Commerce Directive”. The directive organized a uniform legal framework for 20 years and is supplemented and in some respects updated by the Digital Service Act. Since the e-commerce directive came into effect, new and innovative digital services have appeared that have dramatically changed the daily lives of users. In particular, the method of communication and new ways of doing business have been constantly developing in recent years. New digital services have led to significant social and economic changes, but this has also created new risks and challenges. The COVID-19 pandemic in particular has made it clear that digital services have become indispensable in almost all areas of daily life. Accordingly, it has become necessary to take appropriate preventive measures and adapt the existing legal framework.

Objectives of the new law on digital services

The primary goal of the new regulations is to make the Internet a safer space for users in Europe. The focus is on protecting the fundamental rights of users and combating illegal content and misinformation in the context of digital services. Online platforms must become more transparent, which must be achieved in particular by creating new, far-reaching commitments to digital service providers. Digital service providers act as a link between users and the goods, services and content offered in the digital space. Therefore, service providers should assume more accountability, with obligations being proportional to the type of service involved and tailored to the number of users. Thus, providers with more than 45 million monthly active users are categorized as “very large” and are subject to more stringent requirements than, for example, start-ups or SMEs.

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An overview of important due diligence requirements for digital service providers under the Digital Service Act

The scope of the new law includes all online brokers that provide services in the European Union. Providers of such digital platforms and services classified as “extremely large” according to the above criteria must conduct a risk mitigation analysis in the future. As part of this analysis, they must analyze the risks they pose, which aims to mitigate existing risks. The focus is on the risks that exist such as posting illegal content and actions that have a negative impact on fundamental rights, particularly in relation to minors. If minors have access to an online service, special protective measures must also be taken, for example, some advertisements may not be displayed. In addition, new regulations for tracking commercial users should enable the identification of sellers of illegal goods. However, users should have a corresponding complaints mechanism that can be used to check if the content of the digital platform needs to be removed.

Digital Service Act: Ban ‘Dark Patterns’

New provisions of the Digital Services Act will also ban so-called “dark patterns” in the future. These are misleading user interfaces or interfaces that entice users to take unwanted actions.

New recommendation systems through the Digital Services Act

Very large online platforms often use recommendation systems based on algorithms that give users quick access to relevant content. Such recommendation systems should be more transparent in the future and therefore subject to strict requirements, for example, recommendations that are not based on the identification of user attributes should also be provided.

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European Commission authority to oversee very large internet platforms

As part of their agreement, the European Parliament and the European Council decided that the European Commission should have single supervisory powers over internet platforms classified as “very large”. These regulations are based on the idea that given the complexity of the digital space, this is the only way in which new regulations can be effectively and uniformly implemented and monitored. The Commission will work with Member States at the European level.

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