On July 5, 2022, the European Parliament adopted the Digital Services Act (“DSA”) with 539 votes in favor, 54 votes against and 30 abstentions, following the political deal reached on April 23, 2022 (see our previous blog here).
The DSA is addressed to providers of intermediary services (e.g., Internet service providers, cloud providers, search engines, social networks and other online platforms, and online marketplaces). The DSA will also apply to providers established outside the EU, to the extent they offer services to business and individual users established or located in the EU.
Among a range of topics, the DSA requires:
- implementation of notice-and-action mechanisms;
- setting up internal complaint-handling systems;
- ensuring the traceability of traders on online marketplaces; and
- compliance with detailed transparency and accountability obligations, including specifically on online advertising and algorithms used to recommend content.
Moreover, the DSA imposes a ban on so-called dark patterns and online advertising activities targeting minors, or those based on sensitive personal data.
The strictest set of obligations are addressed to providers of “very large online platforms” and “very large online search engines”, i.e., those reaching an average of 45 million or more monthly active users in the EU, and designated as such by the Commission. Specific obligations for such players include:
- conducting assessments of “systemic risks” stemming from the design, functioning and use of their services, including algorithmic systems, in the EU;
- conducting yearly independent audits;
- granting access to data to the authorities, upon request, for the purposes of monitoring and assessing compliance with the DSA, and explaining the design, logic, functioning and the testing of algorithmic systems;
- establishing an independent compliance function;
- paying an annual supervisory fee to the Commission; and
- complying with certain actions required by the Commission in cases of extraordinary circumstances leading to a serious threat to public security or public health.
The DSA text must now be adopted by the Council (expected in September 2022). The DSA will enter into force twenty days after publication in the EU Official Journal.
The DSA will be directly applicable across the EU and will apply fifteen months, or from January, 1 2024 (whichever comes later), after its entry into force. However, the DSA will become enforceable sooner for very large online platforms and very large online search engines, i.e., four months after being designated as such by the Commission.
The Covington team will keep monitoring the developments on the DSA, and is happy to assist with any inquiries on the topic.