Beginning on August 25th the EU's Digital Services Act has gone into effect. This has had US tech companies scrambling to catch up.
The Digital Services Act or DSA was passed to help foster a safer online environment by forcing companies to be accountable for content posted onto their sites. This piece of legislation forces companies to make large changes to their policies on moderation and advertising.
This act is seen as disastrous for the US tech companies, as it damages the very business model that the online platforms were build on. Kingsley Hayes, head of data and privacy litigation at law firm Keller Postman, said "We can expect that platforms will fight tooth and nail to defend their practices, Especially when new compliance rules encroach on their core business models."
Targeted Advertising - The DSA bans any form of targeted advertising. This restriction applies to all forms of online ads, whether that be commercial, political or anything else. It also bans data driven targeted advertising aimed at children or any internet user if it is based on protected characteristics (this includes race, gender, sexual orientation or political affiliation)
Illegal Content - DSA requires all platforms to offer easy ways for users of the platform to report content deemed illegal. This also forces the platforms to have stronger moderation practices.
Transparency - DSA requires companies to be more transparent regarding how their algorithms work.
DSA also puts additional rules for what are considered “very large online platforms”. They are defined as online platforms with over 45 million monthly EU users. Some of these “very large online platforms” are US companies like Google, Amazon, and Facebook. The additional rules are that they must give users the right to opt out of recommendation systems and profiling, share key data with researchers and authorities, cooperate with crisis response requirements, and perform external and independent auditing.
These online platforms, especially the ones based in the US, have been scrambling to start complying by the DSA as strict punishment will go to online platforms that don’t. Said punishments include large fines (run to billions of dollars) and even an EU wide ban. The threat of big fines and an EU-wide ban is hoped to curb manipulative practices and harmful content.
European Commissioner for the Internal Market, Thierry Breton tweeted on X formerly known as Twitter (one of the online platforms that has been effected by DSA), “A safer internet for everyone” and "These systemic platforms play a very important role in our daily lives — so it was time for the EU to set our own rules”.
In conclusion, the EU’s Digital Services Act is a groundbreaking piece of policy that will have a significant impact on US companies operating in the EU. These companies have needed to adjust their policies and practices in order to comply with the new regulations or face significant consequences. Many are optimistic and see it as a win for consumer privacy, but we can only watch and see how this effects online platforms in the long term.
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