Digital Services Regulation - Part Two (obligations and penalties)

In our last article we discussed what the aims of the Digital Service Act, or Digital Services Order ("DSA") are and who it affects. In this article, we look at the basic obligations that apply to digital service providers. We will also look at the penalties for breaching these obligations.

Obligations

Under the DSA, digital service providers are required to comply with new rules designed to increase transparency and online security. In this article, we will focus only on the obligations that the DSA imposes on intermediary service providers, hosting services and online platforms and online marketplaces.

Key obligations for intermediary service providers include:

• Updating contractual terms and conditions to include new aspects and information;
• Establishing a point of contact for service recipients and public authorities: digital service providers must establish contact points where they can be contacted for information and complaints;
• publication of an annual report on content moderation.

In addition to the above obligations, hosting services have the following obligations:

• Establishing a reporting and action mechanism: this is to enable users to report illegal content and to respond to such reports;
• providing users with a justification if their post has been deleted;
• reporting suspected criminal offences threatening the life or safety of persons.

Operators of online platforms are facing stricter requirements to provide a safer environment for their users. This is matched by new obligations such as:

• Establishing an internal complaint handling system: putting in place an effective system to deal with user complaints about online content;
• introducing measures to prevent abuse of the service: they can suspend the provision of services to users who frequently upload illegal content, after giving notice;
• Ensuring transparency of advertising: providing clear information on who pays for advertising, who it promotes and on what criteria it is shown to users;
• not layout interfaces in a dark pattern: prohibiting the design of interfaces in such a way as to manipulate the ability of users to make free and informed decisions;
• protection of minors: prohibition of targeting advertising to minors and increased protection of privacy and security in the use of services.

In addition to the above obligations, operators of online marketplaces have the following obligations:

• Seller verification: ensuring that all sellers on the platform are properly identified (KYC);
• transparency of product information: ensuring that users have access to complete and truthful product information at the proposal stage of the contract;
• Information obligation on illegal products: informing consumers about the purchase of illegal goods, either directly or by publishing them on the platform.

What is the risk of breach of the obligations?

For individual infringements, Member States are entitled to impose fines of up to 6% of the annual worldwide turnover of the intermediary service provider for the previous financial year. The level of penalties varies, of course, according to the severity.

What does this mean for you?

If you consider yourself to be classed as a digital service provider, it is essential that you familiarise yourself with the obligations that the DSA brings. This includes not only adjusting your terms and conditions and putting in place transparent content moderation rules, but also ensuring that your services are compliant with user protection and anti-illegal content requirements.

Are you ready for these changes brought about by the Digital Services Regulation? Have you updated your terms and conditions to comply with the new rules? If necessary, please contact us and we'll help you bring everything into compliance.

Nathanael Schwarz contributed to this article.