The new Digital Services Act (DSA) came into force on 17 February 2024. The aim of the DSA (the Act), as covered in our earlier article, is to create an EU-wide uniform framework to address four issues - the handling of illegal or potentiality harmful online content, the liability of online intermediaries for third-party content, the protection of users' fundamental rights online and the bridging of information asymmetries between the online intermediaries and their users. Under this new regulation all companies in the digital area are responsible for the fight against the distribution of illegal, dangerous and harmful content. In addition, and more broadly, the Act seeks to provide better protection for Internet users.
The DSA targets: (1) new players; (2) imposes new obligations; and (3) introduces new penalties.
1. Which companies are covered by the DSA?
All companies providing online services on the single market, whether established in the EU or not, must comply with the new rules under the DSA.
These include:
- Intermediary service providers offering network infrastructure (Internet access providers, caching operators, etc.).
- Hosting service providers.
- Platforms (including social media platforms and marketplaces).
- Search engines.
Companies are subject to obligations proportionate to their size and audiences:
- Micro-companies and small businesses (with less than 50 employees and annual sales of less than €10 million) are exempt from some of the regulation's obligations.
- Platforms and search engines defined as having "an average monthly number of active recipients of the service in the EU equal to or greater than 45 million" (i.e. 10% of the EU population) are subject to enhanced obligations.
2. What are the DSA's obligations?
The DSA establishes a new liability framework for companies in the digital sector, meaning they are now subject to a multitude of obligations.
Common obligations to all companies are to:
- be transparent about their content moderation policies, recommendation algorithms and advertising;
- adopt conditions of use that respect users' fundamental rights; and
- designate single points of contact for public authorities and service users.
Obligations reserved for platforms, and very large platforms in particular, are to:
- set up simple and effective mechanisms for users to report illegal content published on platforms;
- introduce an internal system for handling user complaints, so that users can challenge content moderation decisions taken by platforms;
- take stronger measures to protect minors online;
- draw up annual transparency reports on their internal systems for handling reports and complaints and their content moderation activities; and
- for marketplaces, to ensure that sellers provide verified information about their identity before they can start selling their products.
3. What are the penalties?
The DSA stipulates that breaches of the regulation must be subject to proportionate and dissuasive penalties, determined by each Member State.
In France, the Regulatory Authority for Audiovisual and Digital Communication (ARCOM) is responsible for monitoring compliance with the DSA regulation and receiving complaints against companies in the digital sector.
Where organisations fail to comply with the obligations set out in the DSA, it could result in fines of up to 6% of their worldwide sales. Temporary measures restricting access to the service may also be imposed in the event of a repeat offence.
Looking to the future
With the DSA now in force since 17 February 2024, all companies providing online services on the single market will be focused on ensuring compliance. The obligations set out above provide an overview of the requirements under the new regulatory regime and the risks related to non-compliance. However, for more information or to discuss any of the points here in more detail, please contact Céline Bey or Inès Rosen.