Fourth article in the mini-series on the Digital Services Act: obligations and sanctions for digital service providers

As we have discussed in previous articles in our mini-series on the Digital Services Act (DSA), the DSA is a key piece of European Union legislation that aims to ensure a safer and more transparent digital space for all users.

The DSA differentiates between different types of digital service providers, which are subject to different obligations depending mainly on their impact (impact on users). This article takes a closer look at the sub-obligations, always in the context of the type of digital service provider.  It also discusses the topic of sanctions that can be imposed on digital service providers under the DSA.

Types of providers and their sub-obligations under the DSA:

1. Intermediary services

If you are a provider of an intermediary service, i.e. if you provide users with access to an online network, a service for the transmission of information, the storage of information at the user's request or caching (for example, ISPs or domain name services), the DSA imposes the following obligations on you:

• Establish a single point of contact for direct electronic communication, both with the supervisory authorities (Czech Telecommunications Office), the EU Commission and users themselves (e.g. telephone, e-mail, form). This contact point must be publicly accessible;
• inform you in the terms and conditions about the procedures and method of moderation and removal of content, including restrictions that are applied to the use of your service, always taking into account the information provided to users of your service;
• publish a report once a year describing the moderation and removal of inappropriate content, including the steps taken in the event of a breach of the terms of the agreement.[1]

2. Hosting services

You are a hosting service provider if you provide space for storing data on servers. Such services can include web hosting, cloud services and databases by default. If you are a provider of hosting services, you are subject to all the obligations for a provider of intermediary services, plus the obligation to:

• Have a simple mechanism for reporting illegal content by other users and then removing it ("Notice and Action");
• respond to each such report and, if the post is deleted, provide the user who uploaded the content with a justification;
• the obligation to inform law enforcement or judicial authorities in the event of a suspected crime threatening the life or safety of persons.[2]

3. Online platforms

You are an online platform operator if you connect sellers with buyers, offer digital content or allow users to share content. Typically, this includes social networking and e-commerce sites, travel and accommodation portals, etc.). In this case, you are subject to the following obligations under the DSA in addition to the obligations for hosting providers:

• Establish an internal system for handling complaints with the possibility of appealing a decision to remove content;
• priority response to notifications from so-called credible whistleblowers;
• introduce measures to prevent abuse of the service, i.e. the possibility to suspend the service to users who repeatedly upload illegal content;
• publish information on out-of-court settlements and account suspensions in its annual reports;
• at least every six months, it must publish the number of its users;
• banning "dark patterns" or interfaces that manipulate user decisions;
• transparency of advertising and recommender systems, with opportunities to influence them;
• a ban on targeting of ads to minors, i.e. a ban on targeting ads to minors based on profiling or sensitive data;
• ensure a high level of privacy, security and protection of minors.[3]

4. Online marketplace

If you operate an online marketplace, in addition to all the above obligations, you must in particular:

• Apply the "know your business customer" principle – you can only sell goods and services if the merchants provide you with contact and other information;
• design the online interface so that it is easy to communicate the identification of products or services;
• conduct random checks on products and services for compliance with regulations.

5. Very large online platforms and very large online search engines (VLOP and VLOSE)

You are a service provider if your service has more than 45 million monthly users in the EU. Given the influence and impact of such services, the DSA imposes the most obligations on providers, including those that apply to online platforms:

• Assessing the risks posed by the service and taking adequate measures to mitigate them;
• conduct independent audits;
• establish a crisis response mechanism;
• enable the use of recommender systems without profiling or keeping an archive of ads;
• introduction of an internal body to monitor compliance with the DSA rules;
• pay a supervision fee to the European Commission.

 

Sanctions under the DSA

Under the DSA, the supervisory authority may impose a fine of up to 6% of the worldwide annual turnover if the digital service provider (i) breaches its obligations under the DSA, (ii) fails to comply with interim measures, or (iii) breaches its commitments.

At the same time, the inspection body may apply periodic penalties of up to 5% of the average daily worldwide turnover for each day of delay in complying with corrective measures, interim measures, commitments.

As a last resort, in the event of a persistent illegal situation causing serious harm to users and involving criminal offences threatening the life or safety of persons, the Commission may also request the temporary suspension of the service.[4]

Conclusion

The DSA emphasises accountability and transparency in the digital space, which is essential to protect the rights and freedoms of internet users. Digital service providers must be proactive in implementing these requirements to ensure compliance with the regulation and protect their users. For further assistance with DSA implementation, please do not hesitate to contact our office.

 

[1] What rules and obligations does the Digital Services Act bring? [online]. [cit. 2024-04-16]. Available from: https://www.mpo.cz/cz/podnikani/digitalni-ekonomika/jaka-pravidla-a-povinnosti-prinasi-narizeni-o-digitalnich-sluzbach---271930/

[2] Ibid.

[3] Ibid.

[4] Enforcement framework under the Digital Services Act [online] [cited 2024-04-16]. Available from: https://digital-strategy.ec.europa.eu/cs/policies/dsa-enforcement