Will the Digital Services Act impact you?
The Digital Services Act (or DSA) is the most important redefinition of the rules for offering online content, services and products to consumers in the EU in the past 20 years. Does your company fall within the scope of this regulation? Find out more about the new obligations for intermediary service providers here.
The new rules regulate digital service providers acting as intermediaries in providing goods, services and content to consumers online. The DSA is a regulation, which means that the same rules are directly applicable in all EU member states. This is contrary to the e-Commerce Directive, the current legislation that covers this area.
Fines for non-compliance are very steep, up to 6% of an organisation's annual global turnover. There are specific sanctions for non-compliance with information requests of up to 1% of the annual worldwide turnover. There are also periodic penalties in the case of non-compliance with decisions, binding commitments or information requests of up to up to 5% of the average daily worldwide turnover.
Timing of the Digital Services Act
The Digital Services Act regulation enters into force on 16 November 2022. The majority of obligations in the DSA will become applicable on 17 February 2024. For very large online platforms and very large search engines, most of the rules will likely become applicable sooner. For the largest digital service providers, the regulation will become applicable four months after the European Commission (the EC) has designated them as very large online platforms or a very large search engines. We expect this to start happening as of Q2 2023. All online platforms must publish their average monthly users by 17 February 2023 so that the EC can make their determinations.
Scope of the Digital Services Act
The DSA will apply to providers of intermediary services, regardless of their place of establishment or residence, if they operate in the EU and there is a “substantial connection” to the EU.
A substantial connection exists when the provider:
- has an establishment in the EU; or
- has a significant number of users in the EU; or
- targets its activities towards one or more EU member states.
The definition of intermediary services in the DSA is the same as in the e-Commerce Directive, and companies targeted are the same. Indirectly it will affect an even larger group of companies, including traders on platforms and IP owners.
The Digital Services Act’s layered approach to imposing obligations
The DSA introduces new duties for providers and new rights that may be exercised by users. It consists of obligations applicable to all intermediary services providers with cumulative obligations for each new layer. Extensive (and specific) obligations are introduced for a new category of intermediary services, online platforms and very large online platforms.
Find out more about the layered approach
Layer one: Providers of intermediary services
This covers a broad range of digital service providers in the EU including internet service providers, content distribution networks, web-based messaging services and wireless local area networks.
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Layer two: Providers of hosting services
Services that consist of the storage of information provided by, and at the request of, a recipient of the service (such as webhosting or cloud services).
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Layer three: Online platforms and market places
Providers of intermediary services that consist of the storage and public dissemination of users’ information.
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Layer four: Very large online platforms and search engines
Online platforms or search engines that have 45 million or more active monthly users in the EU.
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