E-Commerce Directive versus the new Digital Services Act: is there a new liability regime for online service providers?
Current-day digital services, technologies and business models are near-unrecognisable from their counterparts covered by the E-Commerce Directive of the year of 2000. Some of the Directive’s key principles and provisions are outdated and no longer compatible with the newest technologies and business practices. It soon became apparent that a new package of legislative measures would need to be adopted at the EU level.
After years of discussions stretching back to December 2020, the European Commission has passed its Digital Services Act (DSA), which, in effect with the Digital Markets Act (DMA), forms a set of new laws applicable throughout the EU as part of the digital strategy known as “A Europe fit for the Digital Age”.
The E-Commerce Directive remains in force, but the DSA reflects some of the changes that have occurred in the last 22 years. In short, the DSA aims to protect online consumers and their fundamental rights by generating a safer digital space, and create an open and transparent online environment, thus levelling the playing field and developing innovation and growth within the EU and abroad.
Sally O’Brien
Author
What does the DSA cover?
The DSA sets out the requirements that cover ‘intermediary services’, a catch-all term that includes internet services providers, caching services, hosting service providers (e.g., cloud services providers, web hosting), online platforms (e.g., marketplaces, app stores, collaborative economy platforms and social media platforms) and online search engines.
The DSA applies to the EU, which includes online businesses that offer services in the EU single market, even if established outside of the EU. This means that all intermediaries that have EU-based users will be expected to comply, irrespective of where the providers of those services are established or located. The DSA applies to all such businesses, whether large or small (with specific regulations relevant to enterprise size).
Does the DSA establish new guidelines in terms of liability?
For the last 20 years, a core principle of the E-Commerce Directive has been that online intermediaries are not liable for the information transmitted through its service or posted by its users, provided it was not actively involved in the transmission or took action to delete or disable access to the illegal or even ‘harmful’ information upon obtaining knowledge or awareness.
The DSA maintains this exemption of liability, which means that the framework adopted by the E-Commerce Directive in this regard remains unchanged. The DSA also maintains the prohibition of general monitoring or active fact-finding obligations stipulated in the E-Commerce Directive. Likewise, voluntary initiatives to monitor, disable or remove illegal content will not disqualify an intermediary from the liability exemptions related to mere conduit, hosting or caching, as stated in the E-Commerce Directive.
However, as opposed to the E-Commerce Directive, the DSA further elaborates on the due diligence obligations applicable to intermediary services (included in Chapter III of the DSA). These include new rules related to illegal content, content moderation, algorithm oversight and mandatory information to be provided to consumers and businesses, and requirements for “compliance by design”. Such due diligence obligations vary depending on the digital service provider’s role, size, and impact.
How can Logan & Partners help?
Compliance with the DSA requires a detailed assessment of the scope of new legislation, and an analysis of the measures that your business will need to put in place. Fines for noncompliance are high, reaching a maximum of 6% of a company’s annual worldwide turnover, and are only part of the expenses you could incur. For more information about whether and how your business can be affected by the DSA, please contact Kelly Logan or Isadora Werneck and schedule a 20-minute free consultation.
Isadora Werneck
Contributor
isadora.werneck@loganpartners.com
