The Digital Services Act (or DSA) is the most important redefinition of the rules for a safer and more accountable online environment in the EU in the past 20 years. It contains numerous new provisions and obligations for digital intermediary services. Managers should focus on the new obligations for intermediary service providers and see if their company falls within the scope of this regulation.
The new rules regulate digital service providers acting as intermediaries in providing goods, services and content to consumers online. These include liability rules for illegal content, a far-reaching system of tightened and new due diligence obligations as well as an effective enforcement regime. The DSA is a regulation, which means that the same rules are directly applicable in all EU member states.
Fines for non-compliance are very high and can reach up to 6% of an organisation's annual global turnover. There are specific sanctions for non-compliance with information requests of up to 1% of the annual worldwide turnover. There are also periodic penalties in the case of non-compliance with decisions, binding commitments or information requests of up to up to 5% of the average daily worldwide turnover.
What is the timing of the Digital Services Act?
The Digital Services Act regulation entered into force on 16 November 2022. The majority of obligations in the DSA will become applicable on 17 February 2024. All online platforms will have 3 months to report the number of active end users (by 17 February 2023) on their websites. For the largest digital service providers, the regulation will become applicable four months after the European Commission has designated them as very large online platforms or a very large search engines based on the report publish by the platforms.
What is the scope of the Digital Services Act?
The DSA will apply to providers of intermediary services, regardless of their jurisdiction of establishment or residence, if they operate in the EU and there is a “substantial connection” to the EU.
A substantial connection exists when the provider:
- has an establishment in the EU; or
- has a significant number of users in one or more EU member states in relation to its or their population; or
- targets its activities towards one or more EU member states.
The definition of intermediary services in the DSA is the same as in the e-Commerce Directive, and companies targeted are the same. Indirectly it will affect an even larger group of companies, including traders on platforms and IP owners.
Companies should check whether and to what extent they are affected by the new obligations and reorganise compliance structures in good time, making the necessary changes to the services and adapting their terms and conditions.
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