Marching to the Cyber Space of the Future: Digital Services Act Proposal and its Implications

The policy announced by the European Union to update the rules governing public relations related to the digital environment continues in full force. Today on the agenda is the proposal to adopt the so-called Digital Services Act (DSA). Presented by the European Commission for the first time in December 2020, along with the draft Digital Markets Act (DMA), the DSA draft received a number of proposals for amendment from both the European Parliament and the Council of the EU in the course of the ordinary legislative procedure in the Union. The current stage of the draft is the conducting of a trialogue between the EP, the EU Council and the EC on the final text of the Act, which should optimistically be adopted in the summer of 2022.

The DSA draft contains a diverse set of rules concerning the online space, digital service providers and, above all, their obligations in relation to the content they provide access to. As stated in all the reports and considerations on the adoption of the regulation, its rules represent a long-needed update of the common regulatory framework established by the E-commerce Directive [1]. However, the new regulation does not provide for its complete repeal, but rather complements it and covers a wider range of public relations. It is interesting to note that in the versions of the text discussed so far, many of the basic principles introduced by the E-commerce Directive, such as the lack of a general obligation for monitoring and the principle of applicable law of the digital service provider's country of origin, are retained. This leads to the conclusion that although the EU is satisfied with the general direction of development of the digital environment, which it set at the beginning of the millennium, the devil is in the details, and they (evident from the volume of the DSA and the DMA) are either absent or lack fine-tuning.

In addition to the the E-commerce Directive, the new draft Regulation should be considered in conjunction with other Community acts such as the Platform-to-Business Regulation [2], the General Data Protection Regulation [3], the Directive on the Copyright in the digital single market (CDSM) [4], as well as with the relevant regulations at national level. In this complex framework of interaction, the DSA should have both the role of lex generalis (for example with regard to the rules in Article 17 of the CDSM Directive) in some cases and the role of lex specialis in others (mainly with regard to the rules introduced by the the E-commerce Directive).

With regard to certain rules, it can be argued that the draft DSA envisages the introduction of detailed regulation for the first time (with the exception of some general rules at the MS constitutional or international level). The obligations of digital service providers in relation to the freedom of expression of their users should be assessed as such. They have a wide range and relate both to the control that can be exercised over published content and users' access to the services offered by the provider, and to the mechanisms for protecting and appealing against providers’ decisions. Such issues are extremely sensitive, given the balance to be struck between them and the generally accepted interest in controlling the distribution of various types of illegal content online. By regulating this type of problems, the European legislative bodies are clearly stating their position towards digital service providers and in particular towards online giants (for which a special regime has been introduced as "very large online platforms" (VLOPs) as entities whose activities constitute a matter of public interest which should not be governed solely by the principle of contractual freedom.

In this regard - one of the discussed problematic topics regarding the adoption of the DSA is the effect that the Act would have on competition in the European market. A main idea that pierces the whole DSA proposal is to reduce self-regulation by digital service providers through codes of conduct and similar tools and to bring it to the forefront of publicly regulated activities. This system is related to the appointment of many officials, control by national and EU bodies and others.

While on the one hand, such phenomena provide a wide field for theoretical discussion on the existence of a trend of over-regulation of the digital environment, the practical problem for market stakeholders (and especially smaller platforms) would be the ability to comply with all new requirements. The way for DSA to address this kind of issue is through the introduction of different volumes of obligations for different types of digital service providers. Logically, the largest volume of obligations is foreseen to be applicable only to the very large online platforms, which goes in hand also with direct control by the EC. However, it is still unclear which these platforms will be, as no final consensus has been reached on the criteria for determining them (apart from the number 45 million users). In any case, fostering competition would be about limiting the circle of the VLOPs to a few well-known major market players. In light of the recent tensions, including threats to leave the EU, caused by the effect of the GDPR on some of these digital platforms, and in particular the difficult possibility of transferring personal data to the United States, it remains to be seen whether the new requirements introduced by the DSA applicable to online giants will not be the straw that breaks the camel’s back and initiates the redesign of the online environment to which EU consumers have access.

[1] Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000

[2] Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019

[3] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016

[4] Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019