EU sets stricter rules for Internet companies

EU sets stricter rules for Internet companies

Hate speech on the internet and fraud in online trading – in the future, service providers will have to act faster and more sharply against this. This is what the Digital Services Act of the EU requires.

It is the gold standard for Internet regulation, even a new digital basic law: the creators of the Digital Services Act (DSA) are literally rushing to emphasize the importance of the European regulatory framework for the Internet. For months, the EU Parliament, the Council of Ministers and the EU Commission struggled over how to put the big service providers in the World Wide Web in the barriers. The breakthrough came on April 23. After a final marathon of negotiations, the European institutions involved announced that they had agreed on a framework for the Digital Services Act.

In mid-December 2020, the EU Commission submitted a first draft for the DSA. 14 Months later, Commission President Ursula von der Leyen said: “Today’s agreement on the legal act for digital services is historic, both in terms of speed and content.“ The basic rules for all online services in the EU would be improved. It also ensures that the online environment remains a safe space that protects freedom of expression and the opportunities for digital companies. The rules put into practice the principle that what is illegal offline must also be illegal online.

The Digital Services Act is intended to hold the large online companies more accountable. “Platforms should make their content moderation decisions transparent, prevent dangerous disinformation from spreading, and avoid unsafe products being offered on marketplaces,” said European Digital Commissioner Margrethe Vestager. “With today’s agreement, we are ensuring that the platforms are held accountable for the risks that their services may pose to society and citizens.“

“The regulatory framework gives the Commission oversight of very large platforms,” adds Competition Commissioner Thierry Breton, “including the possibility of imposing effective and dissuasive sanctions of up to six percent of global sales or even a ban on activity in the EU internal market in the event of repeated serious violations.“ The Wild West days are finally over. With the DSA, the times came to an end when the big online platforms behaved as if they were “too big to care”.

This is a clear announcement to Amazon, Facebook, Google and Co. For the first time, there is a uniform set of rules with the DSA on the duties and responsibilities of online platforms, according to the embassy from Brussels. The larger the platform, the more responsibility it has and the more duties it has to fulfill. Specifically, it is about the following points:

  • Combating illegal content through a mandatory reporting system: Users should be allowed to flag and report such content. Platforms must enable cooperation with “trustworthy whistleblowers”.
  • New rules for the traceability of business users on online marketplaces to make it easier to track sellers of illegal goods.
  • Effective complaint mechanisms allow users to have decisions reviewed by platform operators, for example when it comes to why a content has been removed or not removed.
  • More transparency of online platforms, especially in the algorithms that underlie, for example, the recommendation systems of the platforms.
  • Obligations for very large platforms to analyze risks for the misuse of their systems and to take measures. The risk management of the platforms is reviewed by an independent party.
  • Access for research to the core data of larger platforms in order to be able to independently investigate the mode of action of the algorithms as well as risks for society and democracy.
  • Enforcement rules that reflect the complexity of the online space: the main role is played by the Member States. They will be supported by a new European Body for Digital Services. For very large platforms, the EU Commission is responsible for monitoring and enforcement.

Basically, all companies that offer some kind of online service are affected by the new set of rules. Instagram Facebook and Instagram social media providers such as TikTok, Twitter and Meta, but also messengers such as WhatsApp and Telegram, search engines such as Google, providers of app stores such as Apple and online marketplaces such as Amazon and Ebay. In addition, web hosters, Internet access services and cloud providers must also comply with the new rules.

How sharply regulated in the end depends on the size of the platform. Large services that reach more than ten percent of the approximately 450 million consumers in the EU with their offers are to be subject to stricter requirements than smaller providers with less than 45 million monthly active users. All providers offering online services in the EU must appoint a contact or a legal representative. This should be able to slow down providers such as Telegram. In the course of the persecution of disinformation by corona deniers and conspiracy theorists, German authorities in particular have repeatedly had difficulties contacting Telegram officials.

The rules of the DSA should still provide a lot of talk. Especially the question of how deep the insights of authorities into code and algorithms should be, will probably be discussed controversially. At this point, the online companies like to argue with trade secrets in order to protect their business. The desire to view data in order to understand how online services address their services is also unlikely to be met with little favor among corporations.

It will be interesting to see what Amazon, Facebook, Google and Co. have to say about the Digital Services Act. At the end of May, EU representatives want to travel to the USA and present the rules and regulations in detail to the large online companies. Whether the Internet giants will then be able to defuse the regulations at one point or another is in the stars.

The final text of the law has not yet been determined. Currently, the draft, which the EU bodies have agreed on, comprises 113 pages. This must then be officially adopted by the EU Council of Ministers and the EU Parliament. This should happen in the late summer of 2022. The DSA is scheduled to enter into force on 1 January 2024. After a transition period of four months, all online service providers in the EU must comply with the new rules.

In view of the uncertainty in the further procedure, industry representatives are still holding back with an assessment of the DSA. Since the first press releases of the three participating EU institutions from the Commission, Council and Parliament differed in their respective content priorities, a final assessment of the agreement is only possible when the final legal text is available, according to the Federal Association of the Digital Economy (BVDW).

From the point of view of the industry representatives, a new version of the digital legislation and the adaptation of the European framework conditions to the requirements of the 21st century is more than overdue. However, there is still a risk that the DSA could lead to a massive restriction for companies in the digital economy and more legal uncertainty.

“If the compromise contains many of the very restrictive provisions of Parliament, this would be massive for the digital economy,” comments Thomas Duhr, Vice President of the BVDW, on the present draft. “This would result in a legally uncertain combination of the DSA with the GDPR and the ePrivacy Regulation, which is still to be finalized.“

*Martin Bayer’s specialty is business software: Business intelligence, big data, CRM, ECM and ERP and the support of news and title sections in the print edition of COMPUTERWOCHE.

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