DSA not just for big players
From 25 August 2023, large companies such as Google, Facebook, and LinkedIn must comply with new rules for handling illegal content and using targeted advertising. The rules are part of the EU's Digital Services Regulation known as the Digital Services Act (DSA). Although the DSA is now mainly talked about in connection with large players in the digital services market, smaller companies should also pay attention.
The DSA is based on the principle that "what is illegal offline should be illegal online". From this follow its main objectives, i.e., to combat illegal content, services and goods, and to increase the transparency of targeted advertising and algorithms. For digital service providers, this means, among other things, that they must put in place a mechanism on their platforms allowing users to report illegal content. The provider must then investigate the illegality. If they then conclude that the content is indeed illegal, they should remove it from their platform. This intended moderation of (illegal) content has provoked the most heated public debate due to concerns about any excessive deletion of content, possibly leading to unwanted censorship and restrictions on the freedom of speech by digital service providers.
Other fundamental changes concern advertising, which has become an integral part of digital platforms. The DSA bans targeted advertising aimed at minors, and targeting ads based on sensitive data that the platform has about its users (e.g., their sexual orientation, skin colour, or religion). It will also be forbidden to use ‘dark patterns’, i.e., manipulating elements on the websites misleading users and making them click on something they do not really want. Thanks to the DSA, the functioning of algorithms should be more transparent, and users shall have at least some control over it. The new rules will affect everyday life by, e.g., letting users choose the chronological order of their feeds on social networks, rather than having it arranged by an algorithm.
Companies that fail to comply with the DSA’s rules face heavy fines of up to six percent of their annual global turnover. For now, less than twenty online platforms and search engines used by more than 45 million EU users per month have to abide by the rules. However, from mid-February 2024, the new rules will to some extent apply also to smaller companies that provide digital services, such as cloud and web hosting, online marketplaces, or sharing economy platforms. Companies should therefore start preparing for the upcoming changes now, to make sure that their digital services comply with the DSA rules come February.