DIGITAL REGULATION TIMELINE – EUROPEAN PARLIAMENT VOTES IN FAVOUR OF THE DIGITAL SERVICES ACT

EU – PLATFORM REGULATION 

The European Parliament voted in favour of the Digital Services Act ("DSA") during a plenary vote on amendments, which will set major limits on behavioural advertising by technology companies. The law will also ban profiling minors and will set limits on the use of special category data for advertisement targeting.

Key date(s)

• 9 October 2019 – Ursula von der Leyen proposed a new DSA in her bid for the European Commission (the "Commission") Presidency which initiates a series of consultations with several stakeholders.
• 15 December 2020 – The Commission publishes its proposed Regulation on a Single Market for Digital Services.
• 26 November 2021 – The European Council (the "Council") adopts a position and tables its amendments to the draft DSA.
• 20 January 2022 – The European Parliament (the "Parliament") agrees on its own amendments to the DSA and announces its negotiating position.

Status

• On 20 January 2022, the Parliament voted in favour of the DSA with some amendments. The original DSA proposal published by the Commission will inter alia increase online advertising transparency, require more demanding due diligence from very large online platforms and impose obligations on service providers to moderate illegal content. The Parliament's amendments include more limits on behavioural advertising and a ban on profiling minors or using special category data to target other vulnerable individuals.
• After the Parliament published its position report on 20 January, this initiated a period of informal negotiations between the Commission, the Council and the Parliament with the aim of reaching a joint position. These meetings were scheduled through February, March and April, and presided over by the French Presidency of the European Union. Digital regulation is high on the agenda in the upcoming French national Presidential elections. Therefore, France is pushing strongly for a final agreement between the three European institutions by the end of June. As of 23 April 2022, EU negotiators have reached a provisional political agreement on the DSA which awaits formal approval by MEPs and the Council. Given the extensive and at times highly divergent nature of the Parliament's amendments, it is possible that this process will continue into July and beyond, under the Czech Presidency.

 What it hopes to achieve 

• The DSA is intended to update the European e-Commerce Directive (adopted in 2000) in the context of rapid and widespread developments in the digital sector. It complements the EU Digital Markets Act to "to create a safer and more open digital space".
• The core objective is to protect EU business users, consumers and citizens from online illegal content and products by increasing accountability, transparency and risk management obligation. This is also the overarching aim of the Parliament's amendments which are intended to ensure "what is illegal offline is illegal online" and establish "digital rules to the benefit of consumers and citizens".
• The DSA also aims to resolve inconsistencies between the e-Commerce Directive and subsequent legislative, judicial and regulatory developments whilst maintaining liability protections for digital service providers which limit their services to transferring, caching or hosting information (the e-Commerce Directive "hosting defence").
• The DSA and proposed amendments govern all companies regardless of their location, so long as they provide digital services to recipients established or resident in the EU. This extra-territorial reach suggests that the law is intended to introduce a new global standard, similar to the General Data Protection Regulation.

Who does it impact? 

The DSA Parliamentary amendments will impact a broad range of players providing digital services. This includes:

• intermediary services providing network infrastructure like internet access;
• hosting services;
• online platforms (for example social networks and app stores); and
• "very large online platforms" (with more than 45 million monthly users).

Larger providers with broader activities face more requirements, with specific obligations for "very large online platforms".

These rules are extra-territorial and so will impact online platforms regardless of location.

Digital users in the EU will also be affected by the DSA and the EU Parliamentary amendments if implemented. For example, those who report illegal content could do so anonymously under the DSA amendments. Users would also be able to access more information about how their personal data is used for advertising and have other reasonable options to access the platform if they refuse or withdraw consent to use of this data.

Member State authorities and national regulators have additional obligations and rights under the Parliamentary amendments when looking to compel service providers to remove content or provide information.

Key points 

1. Restrictions on influencing user behaviour

• • Intermediary service providers cannot influence users' behaviour using deceiving or nudging techniques. Examples of these prohibited techniques include altering the structure or display of an online interface to make some consent options more prominent than others. The Commission has the power to add to this list.

2. Increased know your customer obligations

• • Online platforms that connect vendors and customers must use "best efforts" to verify and check information provided by traders that sell to consumers through the platform.

3. Restrictions around targeted advertising

• • Service providers are prohibited from profiling minors. This means they cannot use any techniques that process, reveal or infer personal data of minors to target adverts at them. Equally, targeting using sensitive personal data like health, religious or ethnicity information is prohibited.

4. Transparency around targeted advertising
   • Whilst certain types of personal data are permitted for targeting adverts at adults, platforms must provide these users with more detail about how this data is used for advertising. Users who refuse or withdraw consent for their data to be used must still be able to access the platform.
5. Explaining rankings and recommendations
   • Online platforms must communicate to users in their terms and conditions and on their interface how they recommend and rank content. In both locations they must also include any available options for users to modify this.
6. The hosting defence: protections for online platforms and users
   • Upon re-examination of the hosting defence, Parliament has sought a new balance between fundamental rights. This has led to the inclusion of new safeguards including formalities for Member State authorities seeking to remove content or provide information and the right to effective remedy for online platforms in response. Users are also protected by the option to report content as illegal anonymously.

This blog post provides an overview of a key recent or upcoming development in digital regulation in the UK or EU as part of our horizon scanning timeline which can be found below.

Contacts

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