The European Union Commission and EU Parliament have approved landmark legislation, the Digital Service Act, that will push tech giants such as Meta’s Facebook, Twitter, Instagram, Alphabet’s Google, Apple, Spotify, and Amazon to police illegal content on their online platforms more aggressively than before, with a risk of paying hefty fines for rules violations.
“The Digital Services Act will set new global standards. Citizens will have better control over how their data are used by online platforms and big tech companies. We have finally made sure that what is illegal offline is also illegal online,” rapporteur Christel Schaldemose commented.
Together with the earlier approved Digital Marketing Act, the new legislation agreed upon on April 23, 2022, will set stable standards for an open and safer digital space for platform users and give tech giants a fair playfield for many years ahead.
According to Margrethe Vestager, the European Union competition chief and the key architect of the EU’s digital reforms, the new deal is better than what was tabled by the European Commission in late 2020.
“It’s not a slogan anymore that what is illegal offline should also be seen and dealt with online,” Vestager commented about the DSA in a video posted on Twitter. “Now it is a real thing. Democracy is back.”
The European Commission President, Ursula von der Leyen, also issued a statement terming the Digital Service Act as “historic,” adding that the legislation “will upgrade the ground rules for all online in the EU.”
The Scope of the Legislation
The rules contained in the DSA primarily focus on online platforms and intermediaries, with user-generated content platforms with more than 45 million active platform users in the EU subject to the new law.
Such platforms include social networks such as Twitter and Facebook, online marketplace such as Amazon, and content-sharing platforms such as YouTube, Spotify, and Tiktok. It also covers online travel and accommodation platforms and app stores.
“The DSA will help keep the digital space safe from illegal goods, content, and services and protect fundamental rights online,” EU Council said in a tweet.
The DSA will effectively prohibit using platform algorithms to target users based on their gender, religion, ethnicity, or race. The legislation also bans platforms from targeting children with ads, with platforms accessible to minors being required to implement specific measures to protect them from harmful use of their data.
DSA also bans the widespread “dark patterns,” which refers to the deceptive tactics employed by some marketers to mislead consumers about some products and services, thereby influencing their decision to purchase products that do not match their needs.
Tech Companies should also develop and implement new procedures to help platform users effectively flag harmful content such as disinformation, hate speech, child abuse, and incitement to violence and terrorism.
DSA also includes rules compelling giant tech firms to be open about their algorithms to generate user-recommended content for target users and choose at least one option based on other parameters other than profiling.
Under the new legislation, large platforms such as Facebook, Twitter, Instagram, Tiktok, and search engines such as Google are required to take prescribed measures during a crisis, like the ongoing war in Ukraine.
Impacts of DSA & Consequences of Non-compliance
If the new law, subject to approval by European Union, goes into force in 2022, giant tech companies subject to the DSA will pay hefty fines of up to 6% of the company’s yearly global revenue. Hypothetically, the fines could translate to about $7 billion based on Meta’s 2021 sales.
While DSA has been highly praised in different parts of the world, tech giants seem to have nothing to celebrate. They will face tough times curbing illegal content and shouldering the responsibility of any violation of the rule.
Meta’s Twitter, Facebook, and Instagram will have to do more to flag posts containing illegal content, while YouTube, Tiktok, and Spotify will be responsible for taking down videos containing harmful content from the website.
Amazon, Google, and Apple will also be required to disclose their targeting criteria and remove products and adverts with inaccurate information intended to deceive platform users and influence their buying decision on e-commerce platforms and app stores.
Big Tech Companies Take on DSA
According to Google’s spokesperson, the company welcomes the Digital Service Act’s goals, but it wants to work hand in hand with the EU policymakers to get the remaining technical details right and ensure “the law works for everyone.”
“We welcome the DSA’s goals of making the internet even more safe, transparent, and accountable while ensuring that European users, creators, and businesses continue to benefit from the open web,” said the spokesperson told CNBC.
Twitter also welcomed the DSA, adding it would review the legislation in detail.
“It’s Twitter’s top priority to keep people safe online and protect the health of the public conversation, and within the Digital Services Act, we welcome the increased focus on healthier digital spaces in the EU,” a Twitter spokesperson told CNBC.
The new act is expected to be in force in 2024 if approved.
