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The EU’s proposed Digital Services Act was adopted by the European Parliament on 5 July 2022. While it must still be formally adopted by the Council (expected in September 2022) and then published in the Official Journal, its contents are now largely finalised.
The Act marks the biggest shake up to the rules for online intermediary liability in 20 years and sets out the EU’s stance in the global online harms debate. This involves the fraught attempt to reconcile the damage caused by unregulated user-generated content, fundamental rights to freedom of information and the practical limitations of moderating content at scale.
The new and wide-ranging obligations, particularly the obligations on very large platforms to assess and mitigate risks on their platform, are likely to shape the global approach to content regulation in this emerging area of law.
The Digital Services Act is just part of a wider programme to reform digital regulation notable not just for its ambition but also for the speed of change. The Act has moved at breakneck speed. Political agreement was reached only 18 months after it was proposed in December 2020 and it is likely to start applying to large social media platforms and search engines in 2023, with the remaining provisions applying in 2024.
Whilst being described as an “Act”, this is actually an EU Regulation so will apply directly to every Member State. It imposes tiered obligations so that the more complex and larger the service, the greater the obligations. Those obligations are described below and summarised in the table here.
The Digital Services Act preserves the “hosting”, “caching” and “mere conduit” defences in the eCommerce Directive.
This includes prohibiting any general monitoring obligation from being imposed on these intermediary service providers and preserving the existing “notice and takedown” process - whereby a hosting provider will only become liable for illegal content if, on obtaining actual knowledge of the illegality, they fail to remove or disable access to the content expeditiously.
These intermediary service providers will also benefit from a new “Good Samaritan” provision under which they will not lose these defences simply because they undertake own initiative investigations to identify and remove illegal content.
The preservation of the hosting defence and other intermediary protections is extremely welcome but will now be subject to significant new obligations under the Digital Services Act. All service providers (including those only providing mere conduit and caching services) must comply with the following requirements:
In addition, hosting providers are subject to additional obligations to:
The more important changes in the Digital Services Act apply to providers of “online platforms”. These are hosting providers who, on behalf of a user, store and disseminate information to the public, unless this is a minor ancillary feature. This includes social media services and online marketplaces (but is unlikely to include private messaging services).
Any attempt to regulate user-provided content is fraught with difficulties and raises difficult questions about the balance between fundamental rights to freedom of information, the impact of online harms and the practical limitations attempting to moderate content at scale.
The Digital Service Act appears to take a relatively non-interventionist stance. Save for large platforms (below) there are very limited obligations to police content on the platform. Instead, the new regime appears to have more of a bias to protect content by giving users a right to complain against the removal of content, and even use an out-of-court appeals process if they are unhappy with the platform’s handing of that complaint. This will be a significant change for many platforms who will have to be much more transparent about their moderation processes and may need significant additional resources to deal with subsequent objections and appeals from users.
Alongside these changes are other significant new obligations, including:
While there are some exemptions for small and micro-enterprises, this will be a significant technical and operational lift for many organisations.
The highest tier of regulation applies to:
This designation brings with it some of the very strongest obligations in the Digital Services Act. This includes obligations to conduct a risk assessment of their services and to take steps to mitigate any risks identified as part of that process.
To provide additional reassurance that appropriate measures have been taken, these entities must also create an independent compliance function and must commission an annual independent audit.
All of this is then backed up by stringent transparency requirements. This including publishing the independent audit report referred to above alongside other information such as details of the amount of resource dedicated to content moderation. These very large providers must also provide information (including the design, logic the functioning and the testing of their algorithmic systems) to regulators and vetted researchers to allow them to monitor and assess compliance with the Act.
Breach of the Digital Services Act comes with the now customary turnover-based fines. It can be punished by a fine of up to 6% of annual worldwide turnover, and users also have a right to compensation for any damage or loss suffered as a result of a breach.
The Act also allows for enforcement both by national regulators, known as Digital Service Coordinators, and directly by the European Commission. The European Commission will have competence in respect of VLOPs and VLOSEs, with specific rights for the European Commission to charge a fee to cover its supervisory activities.
For most entities, the obligations in the Digital Services Act will apply from the later of 15 months after the Act comes into force and 1 January 2024.
However, it might start to apply to VLOPs and VLOSEs from an earlier date as the Act will apply to them four months after being designated as such by the European Commission. Given the Commission is expected to start the designation process soon after adoption, the Act is expected to these entities in 2023.
The Digital Service Act forms part of a wider reformation of the regulation of digital technology. Alongside the very significant changes it will bring are radical changes to the competition landscape in the Digital Markets Act, reforms to the use of data in the Data Governance Act and new cyber obligations in the NIS2 Directive (all which have recently reached political agreement or been adopted). Slightly further out are other major reforms, such as the Data Act, the AI Act and Health Data Space Regulation (which are still working their way through the legislative process).
The emergence of content regulation laws is not just limited to the EU. There has been an explosion of new laws across the globe including India’s Digital Media Ethics Code, Singapore’s Protection from Online Falsehoods and Manipulation Act and the UK’s Online Safety Bill. Content regulation laws have even been proposed in the US, including the Texan HB 20 law and Florida’s Stop Social Media Censorship Act. However, these laws have generally failed as a violation of the social media companies’ strong rights to freedom of speech under the First Amendment.
While societal factors (such as views on privacy and freedom of speech) have a significant impact on online harms laws, the EU’s position as a “regulatory supertanker” means the Digital Services Act is likely to play a pivotal role in the development of other content regulation laws around the world.
The Digital Services Act will not apply to the UK. However, the UK has chosen to implement similar obligations by way of its Online Safety Bill, which was introduced to Parliament in May 2022. This includes placing significant emphasis on conducting risk assessments against a range of different harms.
The Online Safety Bill appears to take a more interventionist approach compared to the EU Digital Safety Act, including the ability of Ofcom (the UK regulator) to mandate the use of specific content moderation technology. The ‘bells and whistles’ attached to these laws are also very different. For example, the Online Safety Bill contains a range of collateral obligations such as giving users the option to verify their identity and imposing obligations on pornographic websites to block access by children.
This means that while there will be a lot of overlap between the work to prepare for the EU Digital Services Act and the UK’s proposed online safety regime, there will also be a lot of significant differences. This is consistent with the wider global picture as more and more states enact content regulation laws – whilst there are often common themes to this law, the overall picture looks like it will be fragmented and inconsistent.
The text adopted by the EU Parliament is available here.
11 July 2022
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