• The European Parliament has voted yesterday on the Digital Services Act, setting rules of conduct in the digital space.

• The vote was passed with a broad majority: 530 votes to 78, with 80 abstentions.

• While the DSA aims at regulating dominant platforms, it does not automatically exempt smaller ones. “Putting the burden of proof on SMEs is disproportionate”, said Dr. Oliver Grün, President of the European DIGITAL SME Alliance.

The Digital Services Act (DSA) has been adopted by the plenary of the European Parliament in a vote on Thursday. “ Online platforms have become increasingly important in our daily life, bringing new opportunities, but also new risks. It is our duty to make sure that what is illegal offline is illegal online”, said the Member of Parliament leading the file, Christel Schaldemose. “Clear rules for the digital environment are needed. However, the competitiveness of digital companies should stay our main concern, and some of the rules that have been introduced put a disproportionate burden on SMEs”, said Dr. Oliver Grün, President of the European DIGITAL SME Alliance.

As a reminder: In 2020, the European Commission proposed this legal act to tackle the rising spread of illegal products and content online. The act revises the framework set by the so-called e-Commerce Directive of 2000, which ensured that “intermediaries”, i.e. online marketplaces and other types of platforms, but also hosting providers, would not be held responsible for the content they hosted. This means that, e.g., YouTube is not held responsible for illegal content uploaded by users, and that Amazon cannot be blamed for unsafe products sold via their platform. The DSA now updates this rule: It aims to make digital service providers accountable for illegal products and content, while maintaining the main principles of the e-Commerce Directive (limited liability, prohibition of general monitoring, country of origin principle).

How does the DSA affect SMEs?

The legal text proposed by the European Commission prescribed different obligations according to the size of the platform. “We are disappointed that the European Parliament has deviated from this principle in some parts of the text”. said Sebastiano Toffaletti, Secretary-General of DIGITAL SME. In particular, micro and small enterprises now need to apply for a waiver to be excluded from some of the provisions and prove that they do not represent a “significant systemic risk” (Art. 16). “This puts disproportionate burden on smaller players by shifting the burden of proof on them”, said Dr. Grün.

Businesses should be aware of some of the new requirements that will affect them if they, e.g., provide an online marketplace. For instance, a “Know-Your-Business-Customer”-principle is established for marketplaces (Art. 22), and applies also to small companies. Under the new rules, if a marketplace becomes aware that one of its traders is selling an illegal product or service, the platform should remove it, inform the relevant authorities, inform the users that have acquired the product or service. In addition, they should make available a list of all the illegal items removed in the past year.

Further, after a long debate about a potential ban of targeted advertisement altogether, the European Parliament voted to restrict targeted advertising for minors. Also, platforms should give users the option to opt out of tracking to see personalised content on the services they use and offer at least one “recommender system” (i.e the algorithm used to sort and display information), which is not based on profiling. Some of these rules may imply that users will need to provide additional personal information to access platforms, e.g. to verify the age of users, which may lead to the need to provide even further personal information to large platforms.

What are the next steps?

Following the vote in the European Parliament, the torch will be passed on to Member States, who will discuss and vote on the proposal in the Council of the EU throughout the next months. “We hope that the Member States will work with the European Commission and Parliament and to further refine some of the provisions, taking into account SME interests”, said Dr. Oliver Grün.

As a voice of small and medium-sized enterprises in the digital sector, the European DIGITAL SME Alliance welcomes clear rules for the digital space that help to prevent the spread of illegal goods and content. “For a more healthy and balanced digital space to emerge, we need clear rules. More importantly though, we need to ensure that smaller platforms can grow to challenge the established ones, and provide alternatives to internet users. Therefore, any piece of legislation, in particular in digital, needs to support the competitiveness of small and medium-sized enterprises, as they are the backbone of Europe’s (digital) economy.”, says Dr. Oliver Grün.