Review and analysis of the Digital Services Act (DSA)

On 5 July 2022, the European Parliament adopted the final versions of the Digital Services Act (DSA) and the Digital Markets Act (DMA). These regulations are intended to form the pillars of the European Union's digital regulation framework:

- The DSA is tasked with modernizing part of the Directive on electronic commerce in force since 2000, and is intended to tackle harmful or terrorist content and illicit products (counterfeit or dangerous).

- The DMA, for its part, has as its main objective to allow better regulation of the economic activities of very large platforms, designated by the Commission as “gatekeepers.”

As the application of these regulations is scheduled for the course of 2023 for very large platforms and the beginning of 2024 for more modest platforms, this is an opportunity for the firm to dissect them, beginning, in this article, with the DSA.

Review of the Digital Services Act

Formally adopted by the Council of the European Union on 4 October 2022, the Digital Services Act (the DSA) will enter into force in France as from 1 January 2024 (and even earlier for very large platforms) (hereinafter, the “DSA Regulation”).

The DSA Regulation is one of the European Union's major digital projects and has as its principal mission to protect the digital space against the dissemination of illicit content and to guarantee the protection of users' fundamental rights.

The actors covered by the DSA

The DSA Regulation applies to intermediary services provided to recipients of the service whose place of establishment or residence is within the European Union, irrespective of the place of establishment of the providers of those services (Chap. I, Art. 2 of the DSA Regulation).

Accordingly, by way of example: a marketplace whose place of establishment is in New York, providing services to a recipient domiciled in Paris, will be subject to the various obligations laid down by the DSA Regulation.

More concretely, the DSA Regulation will apply to intermediary services offering a network infrastructure, to cloud-type hosting services, to online platforms bringing together sellers and consumers, as well as to very large online platforms and very large search engines, that is to say those reaching more than 45 million Europeans per month (Chap. III, Sec. 5, Art. 33 of the DSA Regulation) (notably the “GAFAM”: Google, Apple, Facebook, Amazon, Microsoft...).

An intermediary service is understood, under the DSA Regulation, as being either a “mere conduit” service, consisting in providing access to a communication network and transmitting information over it, or a “caching” service, consisting in automatically storing the information transmitted in order to facilitate subsequent transmissions (Chap. I, Art. 3, (g) of the DSA Regulation).

However, the obligations imposed on these various platforms will be proportionate to their capacity and size, with a view to not placing too heavy a burden on small businesses. This is why very large platforms, that is to say those reaching more than 45 million European users (i.e. 10% of the Union's population), will be subject to enhanced obligations as well as additional obligations, which we will set out shortly (typically the “GAFAM”).

The various obligations imposed by the DSA:

‍Monitoring of the application of the DSA and penalties:

The DSA Regulation also took it upon itself to determine, for each Member State, an authority in charge of monitoring its proper application, as well as, logically, the penalties applicable in the event of non-compliance.

As regards the monitoring of the application of the DSA Regulation, each Member State will be responsible for designating a “Digital Services Coordinator” (Chap. IV, Sec. 1, Art. 49 of the DSA Regulation), which in France will most likely be ARCOM.

These various coordinators, which will therefore have jurisdiction to receive complaints against online intermediaries, will meet within the “European Board for Digital Services” (Chap. IV, Sec. 3, Arts. 61 and 62 of the DSA Regulation). This board will have the function of issuing analyses and conducting investigations in several countries while assisting the Commission. (Chap. IV, Sec. 1, Art. 63 of the DSA Regulation)

Oversight of the application of the DSA by very large platforms will, however, be carried out directly by the Commission, which may in this respect itself conduct investigations and checks (Chap. IV, Sec. 2, Art. 56(2) of the DSA Regulation). To finance these checks, the companies concerned will have to pay a “supervisory fee” to the Commission, which may go up to 0.05% of their annual worldwide turnover (Chap. III, Sec. 5, Art. 43 of the DSA Regulation).

Non-compliance with the obligations imposed by the DSA Regulation may be penalized by the Commission; for very large platforms, for example, it may impose penalties of up to 6% of their annual worldwide turnover (Chap. IV, Sec. 1, Art. 52 of the DSA Regulation). If the non-compliance is repeated, platforms may even be banned from operating on the European market.

Conclusion:

The DSA Regulation attests to the European Union's determination to provide the digital sector with a genuine legal framework, in order to limit the excesses that the exponential digitalization of our society can bring about.

The proportionate distribution of obligations among the various actors according to their size relieves the smallest businesses of measures that might have proved too burdensome for them. Thus, the DSA Regulation will make it possible, while curbing the harmful effects that the digitalization of our relations can have, to preserve the many opportunities it affords.