Since Feb. 17, 2024, the Digital Services Regulation (better known as the Digital Services Act, "DSA") has been in effect, a major European regulation that radically reforms the law surrounding digital services. The DSA targets so-called brokering services, which are responsible for transmitting, storing and/or distributing information from their customers, such as content-sharing platforms and marketplaces for goods and services.
The introduction of the DSA aims to create a safer and more trustworthy online environment by addressing the distribution of illegal content and disinformation and better protecting the fundamental rights of recipients of brokering services. In addition to imposing obligations on brokering services, such as duties of care regarding potentially illegal content, the DSA also regulates their liability for illegal content posted by their customers. While this is an important part of the legislation, this blog will focus primarily on the duties of care that the DSA imposes on intermediary services.
The DSA applies to all kinds of brokering services. An intermediary service is a digital service that plays a role in transmitting, storing or disseminating information from its customers. These services act as a kind of intermediary in the digital world, facilitating information from customers without creating it themselves.
Within the category of brokering services are several types of services, including hosting services and online platforms:
Hosting services are services aimed at storing information at the request of the customer. A broad spectrum of online services fall under this category, such as cloud services, web hosting, traffic-generation services and e-mail services. These services ensure that information is stored and remains accessible to the recipient, but they do not otherwise disseminate this information to a wide audience.
Online platforms, on the other hand, go one step further. In addition to storing information, they also make it accessible to a large audience. This means that the information a buyer posts on the platform becomes available to many people without the buyer having to take any additional actions. Examples of online platforms include social networks such as X and Instagram, where buyers share posts and photos that can be viewed by many, and online marketplaces such as eBay and Amazon, where products are offered to a large number of consumers.
The obligations for online platforms under the DSA do not apply to micro and small enterprises. A company is considered micro or small if it has fewer than 50 employees and an annual turnover or annual balance sheet total of less than 10 million euros. This exception is designed to spare smaller companies from the large burdens associated with meeting DSA obligations. Should a company grow and no longer meet these conditions, it will have 12 months from losing this status to comply with the obligations applicable to online platform providers.
There is also such a thing as very large online platforms ("VLOPs") and very large search engines ("VLOSEs") within the DSA. These specific categories of online platforms are classified as such by the European Commission when they have an average of more than 45 million active customers per month within the EU over a six-month period. Examples of these types of platforms include well-known social media such as Facebook, large online marketplaces such as Amazon and AirBnB, and search engines such as Google. VLOPs and VLOSEs have additional obligations compared to "normal" online platforms due to their influential role within the EU.
Brokerage service providers are given different responsibilities with the DSA to counter illegal content, as they may knowingly or unknowingly play a role in its distribution. While the DSA does not impose a blanket obligation to continuously monitor all content, it does create a system of due diligence obligations to prevent illegal content and make it inaccessible as soon as possible:
Providers of all types of brokering services should include clear information in their terms and conditions about the restrictions they impose on content provided by customers, including details of policies, procedures, measures and tools used for content moderation.
In addition, as a specific category of brokering services, hosting service providers must provide a user-friendly way for individuals or organizations to report illegal content, make careful, timely, nonrandom and objective decisions about these reports, and provide clear explanations of the decisions made and the available options for appeal.
Providers of online platforms, in turn, have additional obligations on top of this: they must suspend customers who repeatedly post clearly illegal content, as well as customers who frequently file unfounded complaints, and process and handle reports from trusted flaggers (certified organizations that spot illegal online content) as a priority and as quickly as possible.
It is permissible as a provider of a brokering service to impose restrictions on customers, for example by suspending a customer's account if they have posted illegal content or violated the terms and conditions. Since such decisions can have a significant impact on the customer, the DSA provides the opportunity for customers to object, such as by filing a complaint. To make this process fair and transparent, the DSA imposes a number of obligations on brokering service providers:
First, brokering service providers must clearly explain in their terms and conditions how their internal complaint handling system works. In addition, all types of brokering services are required to produce an annual transparency report. This report must include what measures they have taken to combat illegal content, how reports of illegal content have been handled, and what usage restrictions have been imposed. However, the micro and small businesses discussed earlier are exempt from the obligation to conduct transparency reporting.
Hosting service providers must additionally inform individuals or organizations that report illegal content of the decisions made as a result of these reports, and inform customers when their use of the service is restricted, including an explanation of the reason.
Additional obligations apply to providers of online platforms. They must register their decisions to impose restrictions on customers, including the motivation for doing so, in a European Commission database. In addition, they must give customers access to an effective internal complaint handling system, where complaints can be submitted electronically and free of charge. Customers should also be informed about the possibility of having disputes settled by a certified out-of-court body. Finally, online platforms should include in their terms and conditions information about the main parameters used in their recommendation systems and how buyers can adjust them.
Additional requirements apply to B2C online marketplaces given measures are designed to protect consumers while discouraging merchants from offering products or services that violate applicable laws and regulations. Therefore, providers of B2C online marketplaces are required to ensure the traceability of sellers using their platform. This means that they must implement measures to establish and verify the identity of sellers, making every reasonable effort to assess the reliability of the information provided. In addition, they must design and organize their online interface so that sellers are able to comply with consumer law.
In addition to the general due diligence obligations, the DSA also imposes specific obligations designed to protect underage customers. Providers of brokering services must explain the terms and conditions of use of their service, as well as the restrictions on it, in a way that is understandable to minors, especially if the service is primarily targeted at or used by them. On top of this, online platform providers must take measures to ensure a high level of privacy, security and protection of minors when their platform is accessible to minors. Moreover, they must not display advertising based on profiling when they are aware with reasonable certainty that their service is being used by minors.
The DSA places many obligations on providers of brokering services, including online platforms. Complying with these rules requires efforts, from cracking down on illegal content to protecting minors and ensuring consumer rights. Therefore, it is essential to properly evaluate whether your service is covered by the DSA and what specific obligations apply.
