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It is time to translate political ambition into a workable and effective Digital Services Act


white and black wooden quote board

European decision-makers are closing in on a final agreement on the Digital Services Act (DSA). The DSA will define what users can see and how consumers buy and interact online. It will frame how digital services operate and moderate content in a transparent way for years to come. 

After a period of deep discussion and  debate, it is now time to translate political ambition into a workable and effective DSA. A few provisions will, however, require some adjustments to align the new rules with the reality of today’s digital services. 

Despite good intentions, there is a risk that the new rules could inadvertently overwhelm companies’ redress mechanisms at the expense of legitimate claims. If platforms have to offer redress options for any content demotions or to any flaggers, the complaint mechanisms would be bogged down and intermediary services might be unable to manage the tsunami of user redress claims in practice. Even worse, if platforms have to inform bad actors every time they are demoting their content, bad actors will be able to learn which signals are used which will help them circumvent detection. This problem is even more acute in times of conflict or coordinated misinformation campaigns.

Another example are the requirements for online marketplaces. The European Parliament demands that marketplaces make “best efforts” to verify their traders’ identity. While the idea sounds reasonable, it is extremely difficult to put into practice given the sheer number of sellers that exist. Also, marketplaces – which are often SMEs – are not in the best position to verify the authenticity of traders’ documents. This “best efforts” standard coupled with impractical tools could amount to either a general monitoring obligation or to over-blocking of sellers. The latter would lead to many European SMEs being unable to sell their legitimate goods or lead to a dramatic reduction in choices for European consumers. 

A third example is the ambition to protect minors from targeted advertising. Once again an admirable goal. The European Parliament’s latest suggestion is to treat users as minors where there is  any doubt about their age and to prevent platforms from gathering additional data to assess users’ age. Such an approach would lead to a de facto ban on targeted advertising. Policymakers’ concerns about protecting minors are valid but any solution needs to reflect the reality on the ground. A more practical solution would see any limit of targeted ads applying only to “known-minors”.

Beyond getting the law right we also need to ensure effective enforcement. The co-legislators have recently suggested charging very large online platforms (VLOPs) a “supervision fee” for the enforcement mechanism. This idea merits discussion. Obviously, the fee should (only) reflect the activity that is supervised. Currently the proposal refers to an unprecedented EU maximum fee of 0.1% of a company’s global annual net income. In practice this could mean that most of the bill for EU enforcement would be paid by American and other consumers outside of the EU. A more balanced and proportionate solution would be to base the supervision fee on the company’s EU-based net income. The Commission should also publish its annual supervisory costs for each fee period, so that the proportionality and cost-effectiveness of the fee can be scrutinised. 

To stand the test of time, the DSA must remain horizontal and principle-based. Similarly to the DMA, we can expect a last minute scramble to insert new provisions or amendments into the legislation. Policymakers should stick to the proposal’s original objectives. Last minute changes, which have not been properly assessed and debated, will likely have negative consequences for the whole of Europe’s online ecosystem.

After years of hard work, it is now time to agree on a well-functioning regulation that companies, both large and small, can comply with in practice. Ultimately, the DSA should ensure that Europeans can continue to enjoy all the economic and social benefits of digital services that have become so central for all of our lives.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.