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What Businesses Need to Know About the Digital Services Act

What Businesses Need to Know About the Digital Services Act

Released Tuesday, 26th March 2024
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What Businesses Need to Know About the Digital Services Act

What Businesses Need to Know About the Digital Services Act

What Businesses Need to Know About the Digital Services Act

What Businesses Need to Know About the Digital Services Act

Tuesday, 26th March 2024
Good episode? Give it some love!
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How will "the constitution of the internet" affect Ireland's tech firms? asks Sinéad Taaffe, Public & Regulatory Partner at Fieldfisher.Enter the EU's Digital Services Act (DSA)The DSA became fully applicable across the EU on 17 February 2024. One month on from the full application of the DSA, here's a refresher of who it applies to and what it means for them.The DSA seeks to make the online space safer by preventing illegal activities and protecting the fundamental rights of users through enhanced transparency and stronger accountability by intermediary service providers operating in the EU.The DSA introduces obligations, for example, relating to content moderation, online advertising, recommender systems and dark patterns. There is a key focus under the DSA on better protection for minors.In Ireland, Coimisiún na Meán (CnaM) has the role of Digital Services Coordinator (DSC) responsible for the supervision and enforcement of the DSA. The DSC can impose fines and periodic penalty payments and adopt interim measures in order to avoid the risk of serious harm.Who does the DSA apply to?The DSA applies to all providers of online intermediary services in the EU, whether or not the providers are established in the EU. Online intermediary service providers include mere conduit services, caching services and hosting services, e.g. online platforms and online search engines. The most onerous obligations are imposed on very large online providers and search engines (VLOPs and VLOSEs).With the aim of enhancing transparency, intermediary services are obliged to report regularly on content moderation they are engaged in. Hosting service providers are required to put in place mechanisms that allow for the notification of illegal content on their service. Online platforms are required to have an effective complaint-handling system in place. They must also disclose the use of algorithms to recommend content and disclose information on advertisements.Online marketplaces must comply with additional obligations, for example, and they must obtain certain information from traders to ensure traceability.As usual, great power means greater responsibility for those VLOPs and VLOSEs, the big social media and search companies, to whom the strictest obligations of the DSA apply. These online giants, who will be supervised by the European Commission, must comply with all of the obligations applied to other, smaller platforms, and are additionally responsible for implementing measures to mitigate systemic risks associated with their services and undertaking audits at their own cost.Ireland's business-friendly environment has attracted large multinationals, with the country being the European home of 13 out of 22 VLOPs and VLOSEs currently designated by the Commission and has benefited significantly from their presence.Ireland was the first member state to trigger the crisis response mechanism during the Dublin riots in November 2023 in light of concerns regarding online platforms being used to spread hatred to incite violence, and spread disinformation. This saw the European Commission contact Meta and X to remind them of their obligations under the DSA.And if providers don't comply?Non-compliance with the DSA can result in significant fines to providers. The financial penalty for intermediary service providers that infringe the DSA goes beyond even that imposed by GDPR and can be as severe as handing over 6% of worldwide turnover from the previous financial year.Where the challenges lieA key point in the scope of the legislation is that it applies to the service provided, as opposed to the business providing it. This means that an organisation providing a range of services will have to decipher which category their different services fit into. As the obligations differ based on services provided, it is essential that businesses understand where their services lie so as to avoid penalties.A long-term commitmentAdherence to the DSA by...

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