Addressing the minefield of risks and challenges for businesses online – The Digital Services Act

Last Updated on Thursday, 21 July, 2022 at 11:51 am by Andre Camilleri

Christine Said is a Policy Executive at the Malta Business Bureau. The MBB is the EU advisory organisation of the Malta Chamber and the Malta Hotels and Restaurants Association, and a partner of the Enterprise Europe Network.

It is easy to understand why there was a need for the EU to propose the so-called Digital Services Act (DSA) especially when we look back to our internet usage habits ten to fifteen years ago. Through the years, e-commerce has been steadily increasingly in popularity changing the way consumers and businesses shop and do business as it provided greater opportunities to scale up and reach new markets. Those who were dragging their feet had to quickly acclimate to the world of digital services especially with the advent of the global pandemic, which confined people to their homes and made them predominantly reliant on online services. However, as it is usually the case, the more something becomes popular, the more risks and challenges arise. The dependency on digital services therefore makes it pivotal to have safeguards which ensure that consumers and businesses alike can fully utilise these services without the fear of being subjected to insurmountable risks such as exposure to harmful or illegal content.

Put simply, the digital single market is made up of very complex supply chains within which different actors interact in providing seamless consumer and business experiences, and the DSA aims to tackle just that. Fraudulent items are a burden not just on consumers but also on custom services as well as other businesses. To this end, the DSA is fashioned in a manner to counteract unsafe and counterfeit products at their source of sales. This flagging process will also be applicable to illicit online content such as targeting the exploitation of children.

The DSA will include EU-wide application on all digital services that have consumers involved, in removing illegal content as well as offering more protection for the rights of online users. To achieve this, obligations are to be set on different online intermediary services such as internet access providers, cloud computing services or webhosting ones, online search engines and online platforms such as marketplaces.

The DSA introduces measures aimed at hindering the trade of illegal goods and services or content online. This will be done through the facility of making it more accessible for users to flag such illegal content. Moreover, in the case of online marketplaces, it would become easier to trace business users. Other measures included within the DSA seek to empower users and civil society. Some examples of how this can be achieved is through user compensation in case of infringement of rights, the provision of greater access to data generated by the larger platforms to vetted researchers and NGOs, as well as increasing the transparency for online platforms in terms of having more clarity on the algorithms used in promoting content and products to users.

Other measures aim to assess and mitigate risks. The larger online platforms and search engines will need to undertake more comprehensive measures in decreasing risks for their users and the misuse of their systems through various means including audits. Given the weight and information these big platforms and search engines hold, the DSA also has mechanisms set in getting efficient reactions from these online sources in case of crises pertaining to either security or health. In minimising risks for minors, the DSA is to also include safeguards for minors especially in terms of the use of their personal data. Finally, the Commission will have a more defined supervisory and enforcement role in dealing with large online platforms. This means that both the Digital Services Coordinators and the Board for Digital Services will have a greater role to play.

Positively, micro and small enterprises are exempted from some obligations and have more time than other larger businesses to implement measures. The Commission will be further assessing the impact of new rules on small businesses. 

The DSA will benefit businesses by providing the facility to easily flag illegal activities that are detrimental to their trade as well as have access to redress mechanisms. Start-ups and small businesses seeking to innovate can benefit from a level playing field created through the DSA. This balance is created through lower compliance costs making it easier to navigate the single market. Through the DSA smaller companies have a better opportunity to compete with larger enterprises thanks to the common and horizontal rules that will apply across the Digital Single Market. This harmonization makes it simpler for small companies to compete cross border and grow.

There is also an element of proportionality set within the DSA that ensures that the obligations set are applied according to the size of the business in ensuring that the incurred costs of this Act are proportional.

Apart from creating a level playing field, the DSA is even expected to set the example for third countries to follow in establishing standards for digital services. The DSA remains a first in the field of digital regulation and its underlying principle remains that was illegal offline is also illegal online.

The DSA is expected to enter into force later this year.

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