Tech giants manoeuvre to embrace EU’s Digital Services Act

The European Union’s (EU) Digital Services Act (DSA), set to take effect on Friday, August 25, 2023, is poised to bring significant changes to the way tech giants operate within the EU. 

The legislation will impact more than a dozen of the big players, including Facebook and Instagram, Apple’s App Store, and selected Google services, as it introduces new benchmarks on content moderation, user privacy, and transparency.

The DSA marks the EU’s continued leadership in regulating the tech industry, with other substantial legislation like the Digital Markets Act and the AI Act in the pipeline. Its successful implementation will likely serve as a model for similar regulations globally.

Under the DSA, the initial rules apply to the 19 largest online platforms operating in the EU – those with over 45 million users. However, starting in the Q1 2024, these rules will extend to various online platforms, irrespective of their size. Companies that breach the DSA may face fines of up to 6% of their global turnover, and repeated violations could result in bans from operating in Europe.

Notably, Amazon and German fashion retailer Zalando are currently disputing their inclusion on the list and are challenging the regulation in court. Legal experts anticipate that companies will vigorously defend their practices, particularly when these new compliance rules step on the toes of core business models.

Over recent months, the European Commission conducted “stress tests” with the 19 designated platforms to assess their ability to detect and address systemic risks like disinformation. Facebook, Instagram, Twitter, TikTok, and Snapchat all participated, and the Commission concluded that further preparations were needed to fully comply with the DSA.

Just as the DSA comes into effect, a report from non-profit organisation, Eko, reveals that Facebook was still approving online ads containing harmful content. Eko submitted 13 ads, including one inciting violence against immigrants and another calling for the assassination of a high-profile politician in Europe. The social network gave the green light to eight of the ads within 24 hours and blocked five. Fortunately, researchers put a halt on the ads’ progress before any Facebook users saw them.

Reacting to the Eko report, Zuckerberg’s team argued that the results were drawn from a small amount of sample ads and were not representative of the huge numbers of adverts they vet globally on a daily basis.

This is not the first time tech platforms have faced criticism regarding ad content. Earlier this year, Global Witness reported that Facebook, TikTok, and YouTube approved ads inciting violence against the LGBT community in Ireland. Despite these controversies, none of the designated companies has indicated plans to defy the DSA. However, Amazon and Zalando’s legal challenges question their inclusion on the list.

Amazon filed a legal challenge, arguing that larger competitors in certain countries were not designated. While it pursues legal avenues, Amazon has also brought in a number of new functions as part of its DSA compliance program, such as a pathway that enables users to flag up misleading product information.

Similarly, Zalando challenged its inclusion by asserting that its platform had fewer than 31 million monthly active users engaged in transactions with third-party sellers, which is below the stipulated 45 million user threshold.

In the coming months, it will become evident whether any of the designated companies has evaded their legal obligations. Addressing these obligations is expected to be a complex undertaking, especially for platforms with large user bases, as they navigate the intricate landscape of digital regulation in the EU.