What You Need to Know about the European Union’s Digital Services Act (DSA)

In a constantly evolving digital landscape, the European Union undertook an effort to update and modernize its digital platform regulations. This resulted in the Digital Services Act (DSA) that forms a single set of rules that apply to companies doing business in the EU.

The two main goals of these rules are:

To create a safer digital space in which the fundamental rights of all users of digital services are protected

To establish a level playing field to foster innovation, growth, and competitiveness, both in the European market and globally

The DSA’s landmark legislation came into force in November 2022 with full compliance required by January 1, 2024. The DSA applies to all online intermediary services, including social media platforms, online marketplaces, and search engines. However, it has different requirements for different types of services, depending on their size and impact on the online ecosystem.

For example, very large online platforms (VLOPs) with more than 45 million active users in the EU have the most stringent requirements under the DSA, including:

  • Risk assessment and mitigation.

VLOPs must conduct a comprehensive risk assessment of their services and take appropriate measures to mitigate those risks, including risks to users’ fundamental rights.

  • Clear information.

VLOPs must provide users with clear and transparent information about their algorithms, content moderation policies, and how they collect and use personal data.

  • Content moderation.

VLOPs must have effective systems in place to remove illegal and harmful content, and must allow users to flag and appeal content moderation decisions.

  • Targeted advertising.

VLOPs are prohibited from targeting ads to users based on sensitive data, such as a user’s sexual orientation, religion, or political beliefs.

Other online platforms have less stringent requirements under the DSA, but these companies must still take steps to remove illegal and harmful content, protect users’ fundamental rights, and provide transparency about their algorithms. In addition to its provisions for online platforms, the DSA also includes measures to improve the online environment. One of these is enhanced cooperation between online platforms and law enforcement. The DSA requires online platforms to cooperate with law enforcement to remove illegal content and investigate online crimes. The DSA also includes a number of measures to protect minors online, such as prohibiting targeted advertising to children and requiring online platforms to have parental control features in place.

U.S. businesses that operate in the EU or provide services to EU residents must comply by the regulations set forth in the DSA. Failure to comply with the regulation could lead to fines of up to 6% of the company’s global revenue. Companies will need to adapt their compliance processes and policies to meet the new requirements of the regulation. This includes hiring additional data protection officers and investing in technologies that enable them to identify, report, and remove illegal content. It is also imperative for American companies that operate globally to stay informed of any updates to the regulation to ensure that they remain compliant.

The European Union’s Digital Services Act will significantly impact U.S. businesses operating in the EU. It is critical to understand the regulation’s provisions, comply with the new requirements, and keep up-to-date with any changes. While the DSA may seem burdensome, it is an essential step towards creating a safer and more transparent online environment. With this added investment, it is a great time to consider the best way to spend your resources. Gabbit is a smart and cost-effective solution to your communication needs. Our cloud-based communications system makes the most of your resources with secure and consistent service.

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