A significant number of leading technology firms are now under intense legal scrutiny as the European Union’s comprehensive Digital Services Act (DSA) goes into effect this month. The new legislation introduces stringent regulations covering content moderation, user privacy, and transparency.
Major online platforms in the EU, such as Meta’s Facebook and Instagram, TikTok, owned by a Chinese company, and various Google services, are in the process of adapting to the updated requirements. These obligations include measures to prevent the spread of harmful content, curtail specific user-targeting practices, and disclose certain internal data to regulators and affiliated researchers.
The EU has positioned itself as a frontrunner in technology regulation, with additional significant legislation—including the Digital Markets Act and the AI Act—on the horizon. The EU’s approach to implementing these regulations is likely to impact the establishment of similar laws internationally.
However, experts have expressed concerns regarding whether these tech companies have sufficiently aligned their practices with the expectations of lawmakers.
Initially, the DSA regulations apply solely to 19 of the largest online platforms, specifically those with over 45 million users in the EU. Starting from mid-February, these regulations will extend to encompass a wider array of online platforms, regardless of their size.
Companies found to be non-compliant with the DSA may incur fines reaching up to 6 percent of their global annual revenue, and repeat violators could face bans from operating within Europe.
Inquiries made by Reuters to the companies falling under the DSA’s purview regarding changes they have implemented yielded minimal responses, with many referring to public blog posts for information or not responding at all.
Two companies identified for early regulation—Amazon and Zalando—are currently contesting their inclusion on the list in court.
“It is expected that platforms will vigorously defend their practices, especially when compliance measures threaten to disrupt their core business models,” commented Kingsley Hayes, head of data and privacy litigation at the law firm Keller Postman.
Stress tests
In recent months, the European Commission has extended offers to conduct “stress tests” under the DSA for the designated platforms. These assessments evaluate the ability of platforms to “detect, address, and mitigate systemic risks, such as disinformation,” according to a spokesperson from the Commission.
At least five platforms have participated in these tests—Facebook, Instagram, TikTok, Snapchat, and Twitter (now known as X). The Commission noted that further preparation was necessary for compliance with the DSA.
As the new rules take effect, research released by the nonprofit Eko indicates that Facebook was still approving advertisements containing harmful content. The organization submitted 13 ads, including one promoting violence against immigrants and another calling for the assassination of a notable member of the European Parliament. Facebook approved eight ads within 24 hours while rejecting five; however, researchers removed these ads prior to publication, preventing their visibility to users.
In response, Meta stated, “This report was based on a very small sample of ads and is not representative of the number of ads we review daily worldwide.”
Earlier this year, another nonprofit, Global Witness, reported that Facebook, TikTok, and YouTube had all allowed ads inciting violence against the LGBT community in Ireland. Meta and TikTok responded by asserting that hate speech has no place on their platforms and that they are consistently reviewing and enhancing their protocols, while Google did not provide a comment.
Challenging circumstances
Despite none of the designated companies indicating they would disregard the DSA, Amazon and Zalando have raised objections to their classification.
In July, Amazon challenged its designation in the General Court in Luxembourg, Europe’s second-highest judicial authority, contending that larger competitors in specific countries had not been similarly classified.
Nevertheless, Amazon has rolled out several new features as part of its DSA compliance initiative, including a new reporting channel for users to flag inaccurate product information.
Similarly, Zalando has filed a legal challenge, arguing that with only 31 million monthly active users engaging with third-party sellers on its platform, it does not meet the 45 million user threshold.
According to Hayes, it will soon be evident whether any of the designated companies have evaded their legal obligations. “Navigating these responsibilities will be challenging for any platform with a substantial user base.”
© Thomson Reuters 2023
