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The Digital Services Act

The Digital Services Act (DSA), which came into force in November 2022, regulates the obligations of digital services that act as intermediaries in their role of connecting consumers with goods, services, and content.
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The Digital Services Act (DSA), which came into force in November 2022, regulates the obligations of digital services that act as intermediaries in their role of connecting consumers with goods, services, and content.

The rules specified in the DSA primarily concern online intermediaries and platforms. For example, online marketplaces, social networks, content-sharing platforms, app stores, and online travel and accommodation platforms.

Platforms were obliged to report their number of active users in February 2023, those with over 45 million users — 10% of the population in Europe — were designated as a very large online platform or a very large online search engine and were given four months to comply with the DSA regulations.  Platforms with less than 45 million active users have until 17 February 2024 to comply with all the DSA rules.

 

The DSA introduces two new restrictions on targeted advertising on online platforms:

  • Targeted advertising to minors based on profiling is prohibited.
  • Targeted advertising based on profiling that uses special categories of personal data, such as sexual orientation or religious beliefs, is likewise banned.

The new rules will enable users to understand and make informed decisions about the adverts they see. They will need to be clearly informed if and why they are being targeted by each advert and who paid for the advert.

If content is sponsored, as opposed to organic, it should be clearly labelled. This includes sponsored content by influencers and digital creators.

The DSA establishes asymmetric due diligence obligations for different types of intermediaries, depending on the nature of their services and their size and impact, to ensure that their services are not misused for illegal activities and that providers operate responsibly.

Each member state will appoint a digital services coordinator who will be responsible for supervising the brokering services established in their country and/or coordinating with specialised sectoral authorities. Each digital services coordinator will have the requisite powers to impose sanctions, including but not limited to fines, and as a last resort suspension of service.

The level of obligations imposed and the type of enforcement will depend on the nature of the online service provider’s services, the size of the provider, and its impact on the online ecosystem. Fines can reach up to 6% of the global turnover of a service provider.

How should organisations respond to the Digital Services Act?

Organisations will need to assess the impact of the DSA on their business and business model, identifying where changes are needed and where further attention needs to be paid to current processes.

Trusted advisers can help organisations understand how this act can be applied within their existing framework by:  

  1. Assisting organisations that need to comply with the DSA requirements with their risk mitigation strategy and future planning.
  2. Advising organisations on how they can leverage the requirements and provisions of the legislation to differentiate themselves in the market, enhance user trust, and attract potential customers.
  3. Assisting organisations in identifying and mitigating potential risks associated with the DSA. Helping them establish robust risk management frameworks, including processes for assessing and addressing emerging risks related to content moderation, data protection, and user safety.

A comprehensive plan that covers all the new and upcoming legislation covered by the EU’s digital strategy can create opportunities as well as mitigate risk. Read more about the impact of the Data Act. 

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