No longer “too big to care”: EU’s Digital Services Act takes aim at Musk and online platforms

Elon Musk’s free speech driven Twitter bid coincides with the EU reaching political agreement on its Digital Services Act. 

Elon Musk’s $44 billion takeover of Twitter has been one of the most controversial technology transactions in recent years resulting in considerable comment and debate across the political spectrum. At the heart of the controversy is Musk’s view of himself as a “free speech absolutist” and Twitter as the “digital town square where matters vital to the future of humanity are debated”. This view, however, would seem to be at odds with the trend in recent years for the current Twitter executive to move towards tighter content moderation.

Given his attitude, the timing of the takeover is also pertinent as it comes during a period of increasing regulation by governments over content made available on online platforms like Twitter. At the forefront of this regulation are recent bills published by the UK (see our previous blog posts here, here and here) and the EU which, among other things, require platforms to protect users from different types of harmful and illegal content. Sensing a potential clash both the UK and EU have been quick to remind Musk of Twitter’s legal obligations. Thierry Breton, the EU’s commissioner for the internal market noted, ironically on Twitter, that “Be it cars or social media, any company operating in Europe needs to comply with our rules – regardless of their shareholding”. It therefore seems timely to look at the EU rules with which Musk and owners of other large online platforms will be required to comply and which are set out in the Digital Services Act that reached political agreement on 23 April 2022.

Scope

Although the final text of the Act has yet to be released, the Commission has confirmed that the Act will cover different types of online intermediaries offering services in the EU single market regardless of where they are established. However, the obligations that an intermediary will be required to comply with under the Act will scale proportionately depending on their size and nature. So hosting services, such as cloud services, will have to be provided in accordance with a greater number of obligations than the services provided by simple intermediaries, such as domain name registrars. Online platforms, such as online marketplaces or social media platforms, will have to go further still and finally the most onerous set of obligations are reserved for very large online platforms and search engines which have a reach of more than 10% of the 450 million consumers in Europe.

Measures for online platforms

Many of the more onerous measures in the Act apply only to online platforms. These cover measures to counter illegality online such as a mechanism for users to easily flag content with platforms obliged to cooperate with certain ‘trusted flaggers’ and new obligations on the verification and traceability of business users who participate in online market places. There are then measures intended to give greater power to users of online platforms which include the ability to challenge content moderation decisions and transparency measures for online platforms covering a number of aspects most notably on the use of algorithms for recommending content or products to users. Measures also apply to mitigate online risks with platforms being obliged to adapt quickly to public security or health crises, put safeguards in place to protect minors and limit the use of sensitive personal data in targeted online advertising and, for the biggest online platforms, to take risk-based action to prevent the misuse of their systems and agree to independent audits of their risk management systems. Finally, there will be enhanced supervision and enforcement by the Commission for the biggest online platforms as well as important roles for the independent Digital Services Coordinators and Board for Digital Services. The price for getting it wrong could be expensive with the Act allowing for fines of up to 6% of its global turnover for non-compliance. There will also be an annual levy of 0.05% of global turnover to fund this monitoring and enforcement.

Next steps

Once the final text of the Act is released following the political agreement, the Act will be subject to formal approval by the European Parliament and the Council. The Act will then be directly applicable across the EU and will apply fifteen months from the date of adoption although the very large online platforms and search engines will have to comply within four months from being designated as such.

As ever the devil is in the detail and so the final text of the Act will be key in assessing exactly what intermediaries and platforms will have to do to comply with the Act and no doubt they will continue to liaise with policymakers on the outstanding technical details. However, the messaging from the Commission, which mirrors that of the UK government in the context of the Online Safety Bill, indicates that the Act will require a major change in the way that the largest online platforms do business in the EU. Either way, Elon Musk has plenty to get to grips with as the realities of owning the “digital town square” begin to set in.