United States – Social Media

On February 17, 2024, Regulation (EU) 2022/2065 on a Single Market For
Digital Services, known as the “Digital Services Act”
or “DSA”, became fully applicable to all online
intermediary services providers falling within its scope. The DSA
has introduced a new set of obligations for online intermediary
services providers to restore a level-playing field in the digital
economy, and to protect users against harmful and illegal goods,
services, and content online.

1. Who does the DSA apply to?

The DSA applies to Providers of Intermediary Services
offering services to individuals (B2C) and/or companies (B2B) that
are established or located within the EU. Pursuant to the
DSA, “Intermediary Services” refers to the following
information society services:

• “a ‘mere conduit’ service, consisting of the
  transmission in a communication network of information provided by
  a recipient of the service, or the provision of access to a
  communication network;
• “a ‘caching’ service, consisting of the
  transmission in a communication network of information provided by
  a recipient of the service, involving the automatic, intermediate
  and temporary storage of that information, performed for the sole
  purpose of making more efficient the information’s onward
  transmission to other recipients upon their request“;
  [or]
• “a ‘hosting’ service, consisting of the
  storage of information provided by, and at the request of, a
  recipient of the service.“

In light of this definition, the DSA notably applies to the
following categories of Providers of Intermediary Services:

• Online platforms;
• Online search engines;
• Internet service providers;
• Marketplaces;
• Cloud computing service providers;
• Hosting services;
• Messaging service providers;
• Social media platforms;
• Content-sharing platforms;
• App stores;
• Online travel and accommodation platforms; etc.

The DSA applies to “intermediary services offered to
recipients of the service that have their place of establishment or
are located in the Union, irrespective of where the providers of
those intermediary services have their place of
establishment“. This means that the DSA has an
extraterritorial effect, and its
applicability is triggered by the EU location or
establishment of the recipients of the services, and not
by the country where the Provider of Intermediary Services is
established.

2. Which obligations does the DSA impose?

The DSA introduces a layered approach with respect to the
obligation it imposes.

It provides obligations that apply to all Providers of
Intermediary Services, which include notably:

• Obligation to implement measures to counter illegal goods,
  services or content online, such as transparency obligation; annual
  reporting obligation related to content moderation activities;
  cooperation with competent authorities and “trusted
  flaggers”;
• Obligation to designate points of contact for users and
  competent authorities; and in certain cases, a

On top of the obligations that apply to all Providers of
Intermediary Services, Providers of Hosting
Services (including online platforms)
must also notably comply with the following obligations:

• Obligation to set-up a mechanism which enables users to report
  illegal content;
• Obligation to provide statement of reasons explaining the
  content moderation measures implemented;
• Obligation to report suspicion of criminal offences to law
  enforcement authorities.

On top of the obligations that apply to all Providers of
Intermediary Services and Providers of Hosting Services,
Online platforms must also notably comply with the
following obligations:

• Obligation to provide an internal complaint-handling system
  that enables to lodge complaints regarding content moderation
  measures taken;
• Transparency obligationregarding advertisements and recommender
  systems;
• Ban on targeted advertising based on profiling of children or
  based on special categories of personal data;
• Ban on using “dark patterns” on the interface of
  online platforms, referring to misleading tricks that manipulate
  users into choices they do not intend to make;
• Obligation to implement measures and protection against
  misuse;
• Obligation to publish every 6 months information on the number
  of active users in the EU.

On top of the obligations that apply to all Providers of
Intermediary Services, Providers of Hosting Services and Online
Platforms, Marketplaces must also notably comply
with the following obligations:

• Obligation to conduct due diligence and ensure the traceability
  of business usersusing the marketplace;
• Obligation to monitor and inform consumers about illegal
  product and services offered on the marketplace.

In addition to the above, the DSA provides additional
obligations for larger players, namely “Very Large
Online Platforms” (VLOPs) and “Very
Large Online Search Engines” (VLOSEs). VLOPs and
VLOSEs are online platforms and online search engines which have a
number of average monthly active EU users equal to or higher than
45 million, and which have been designated as such by the European
Commission. The list of VLOPs and VLOSEs that have been designated
by the European Commission to date is available here. In addition to the abovementioned
obligations, VLOPs and VLOSEs must also notably comply with the
following obligations:

• Obligation to conduct risk assessment on systemic risks that
  may affect their systems and implementation of mitigation
  measures;
• Obligation to commission annual audit;
• Obligation to provide further information about their
  advertising system;
• Obligation to establish a compliance function overseeing
  compliance with the DSA;
• Obligation to pay annual fee to the European Commission;
• Obligation to provide access to data to competent authorities
  and vetted researchers.

All organizations falling within the scope of the DSA
must have complied to their respective obligations since February
17, 2024.

3. How does the DSA interplay with the Digital Markets
Act?

The Digital Market Act (DMA) and DSA both regulate online
platforms; however, their scope and purpose are different. The
DMA regulates the economic power of larger platforms
considered as “gatekeepers”, namely the
platforms playing a dominant role in the digital ecosystem.
Therefore, contrary to the DSA, the DMA doesn’t apply to all
online platforms, but only to those that meet its criteria to be
qualified as “gatekeeper”. Further, the purpose of the
DMA is to prevent such gatekeepers from engaging in unfair
practices, and to create a fair and competitive economic
landscape.

4. Who will supervise and monitor compliance with the DSA?

The enforcement of the DSA is shared between the
European Commission and the EU Member States. The European
Commission has direct enforcement powers towards VLOPs and VLOSEs;
while EU Members States are responsible for the enforcement towards
other Providers of Intermediary Services.

Each Member State must designate a “Digital
Services Coordinator“, i.e., an independent authority
responsible for supervision and monitoring of compliance with the
DSA. While EU Member States had until February 17 to proceed with
such designation, some EU Member States have still not communicated
the contact details of their Digital Services Coordinator to the
European Commission. The list of designated Digital Services
Coordinators is available here.

The DSA establishes the European Board for Digital
Services, which will act as an independent advisory and
will advise the Digital Services Coordinators and the Commission.
The European Board for Digital Services will ensure the consistent
application of the DSA and an effective cooperation between the
Digital Services Coordinators and the European Commission.

5. What are the risks in case of non-compliance with the
DSA?

Failure to comply with the DSA obligations could be
sanctioned by fines up to 6 % of the annual worldwide
turnover. Furthermore, the supply of incorrect,
incomplete, or misleading information, failure to reply or rectify
incorrect, incomplete or misleading information and failure to
submit to an inspection could be sanctioned by fines of up to 1 %
of the annual income or worldwide turnover.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.