Europe designates 19 platforms as gatekeepers under Digital Services Act

On 25 April 2023, the European Commission published the names of 19 platforms that will face the strictest level of regulation under the Digital Services Act (DSA), the recently rebooted and expanded e-commerce rules in the EU. The designated platforms will be considered gatekeepers and must meet the criteria as either "very large" online platforms or online search engines.

VLOPs/VLOSEs

The designated platforms are 17 Very Large Online Platforms (VLOPs) and two Very Large Online Search Engines (VLOSEs). The principle criterion for regulation as a VLOP and a VLOSE is to have more than 45 million monthly active users in the EU. Platforms were required to report their numbers to the European Commission in February 2023, after which date the EC started the process of designation. The EU considers these large platforms and search engines gatekeepers, which are systemically relevant and therefore have special responsibilities in making the Internet a safe and trustworthy space.

More VLOPs and VLOSEs could be designated in the next weeks. The EC has suggested (via the website Politico) there could be a second batch of VLOPs and VLOSEs designations. At this moment, the EC reported, officials are checking several platforms to determine whether these platforms are covered by the DSA or not.

More scrutiny

These designated platforms will face more obligations than smaller ones and come under additional regulatory scrutiny, including an obligation to allow researchers to access their inner workings. The algorithms, which decide what users see and read those sites, will be inspected by the EC’s in-house experts at the EU's new Centre for Algorithmic Transparency in Seville.

Special obligations

The DSA imposes special obligations on the designated VLOPs and VLOSEs. On 25 August 2023, they must fully comply with these special obligations. Failure to comply with the DSA can result in fines of up to 6% of a company’s global turnover.

The obligations includes:

• More user empowerment:
  • Users must get clear information on why they are recommended certain information and will have the right to opt out from recommendation systems based on profiling;
  • Users must be able to report illegal content easily and platforms must process such reports diligently;
  • Platforms may not display advertisements based on the sensitive data of the user (e.g. ethnic origin, political opinions or sexual orientation);
  • Platforms need to label all advertisements and inform users on who is promoting them;
  • Platforms need to provide an easily understandable, plain-language summary of their terms and conditions in the languages of the member states where they operate.
• Strong protection of minors:
  • Platforms must design their systems to ensure a high level of privacy, security, and safety of minors;
  • Targeted advertising based on profiling towards children is not permitted.
• More diligent content moderation, less disinformation:
  • Platforms and search engines must take measures to address risks linked to the dissemination of illegal content online and negative effects on freedom of expression and information;
  • Platforms must have a mechanism for users to flag illegal content and act quickly when they are notified of such content;
  • Platforms must analyse specific risks and put in place mitigation measures (e.g. to address the spread of disinformation and inauthentic use of their service).
• More transparency and accountability:
  • Platforms must ensure that their risk assessments and compliance with all DSA obligations are externally and independently audited;
  • Platforms must give access to publicly available data to researchers; later on, a special mechanism for vetted researchers must be established;
  • Platforms must publish repositories of all advertisements on their interface;
  • Platforms must publish transparency reports on content moderation decisions and risk management.

Conclusion

On 25 August 2023, the already designated VLOPs and VLOSEs must report their first annual risk assessment to the EC. It remains to be seen whether all platforms will comply fully with all obligations on this date, within this short time, and what action the EC will take against platforms that default.

For more information on the Digital Services Act and how its rules could affect your EU-based business, contact your CMS client partner or these CMS experts: