A new era for digital services in Europe

 

The European Council has adopted the Digital Services Act (DSA) in early October, ushering in a new set of tighter rules for digital services. Although the DSA has not been in force for long, the ground-breaking new rules have already had their first effects.

 

 

Together with its “sibling” the Digital Markets Act (DMA), the DSA aims to reform the behaviour of tech giants and thus create fairer and safer conditions online. But while the DMA focuses mostly on eliminating unfair competition between market actors, the DSA concentrates on illegal content, the transparent operation of online platforms and ensuring the fundamental rights of web users.

 

As Jozef Síkela, Czech Minister for Industry and Trade put it, “By setting new standards for a safer and more accountable online environment, the DSA marks the beginning of a new relationship between online platforms and users and regulators in the European Union and beyond.”

 

 

 

Illustration of the four overlapping categories of online service providers according to the DSA

Simply put, all companies offering digital services in the EU’s single market will have to adhere to the DSA’s new rules.   This affects both companies registered in the EU and anywhere else in the world.   The DSA divides online service providers into four overlapping categories where, like Russian dolls, the first category includes the second, the second includes the third and so on.   - Intermediary services: providers of network infrastructure, like registrars   - Hosting services: cloud and webhosting services   - Online platforms: services that bring together consumers and providers, like online marketplaces, app stores and social media platforms   - Very large online platforms (and very large online search engines): online platforms numbering users over 10% of the 450 million European consumers     Each category has different obligations which keep growing in proportion to the size of the company and its spot on the diagram.     For example, a small company in the intermediary services category has significantly less obligations than a very large platform like Google or Amazon.

 

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+++ Update Spring 2023 +++

 

The European Commission has published the list of 19 very large platforms that will have to adhere to the strictest rules under the DSA. These are: Alibaba, Aliexpress, Amazon Marketplace, Apple App-Store, Booking.com, Facebook, Google Play, Google Maps, Google Shopping, Instagram, LinkedIn, Pinterest, Snapchat, Tiktok, X (formerly Twitter), Wikipedia, Youtube, Zalando, Google and Bing.

 

The platforms were chosen based on their user data published in February 2023. The Commission intends to help the affected platforms to adapt to the new requirements. For example, X and Tiktok have already agreed to conduct stress tests to see how their systems can incorporate their new tasks.

 

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+++ Update June 2024 +++

 

The EU Commission is now also tightening the rules for the Chinese online retailer Temu. It has officially categorised the company as a very large online platform in the context of the DSA. By the end of September, Temu now has to take extensive measures to protect consumers against counterfeiting and IP infringements. Given the current problems on the platform in this regard, it remains to be seen to what extent Temu will be able to meet the given deadline. 

 

Temu's fiercest competitor, SHEIN, was also previously categorised as a very large online platform. This means that two major players in e-commerce are now also subject to the DSA rules in the EU.

 

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All four categories are obliged to issue transparency reports, respect users’ fundamental rights in their terms of operations, and cooperate with the authorities. However, only the inner three categories are required to report criminal offences, and only the inner two must vet their third party suppliers and are banned from targeting children in advertisements.

 

Online platforms, both large and small, also have to work with “trusted flaggers”, users who flag content, products and services as illegal.

 

Finally, only very large platforms are subject to certain risk management obligations and crisis response, as well as external and independent auditing, public accountability and data sharing with authorities and researchers.

 

Legislators hope the new obligations will, among other things, improve the mechanisms for removing illegal content, increase the protection of users’ rights and safety, reduce the number of illegal products and services online, and create transparency within both the operation of service providers and their legal oversight.

 

 

After the Presidents of the European Parliament and the Council of the EU sign it, the DSA will be published in the Official Journal of the European Union and enter into force 20 days later.

 

Then a 15-month grace period follows so the affected parties can get ready for the new rules, which means the DSA will start to apply 15 months after its publication.

 

We at globaleyez are very excited about the DSA and its implications for our work. In particular, we like the requirements about online platforms having to know their third party suppliers, as well as the general notion of reduced illegal content, including counterfeit product listings online.

 

Find out all about third party sellers here

 

Currently, online marketplaces aren’t required to know a lot about their third party sellers. Most have their own, varyingly strict requirements which range from submitting an email address or phone number to uploading proof of identification. No wonder that fraudulent third party sellers usually find their way to platforms with the least amount of security checks and requirements, provide their contact info and start selling.

 

Screenshot of a random listing for a “Quiksilver” T-shirt on wish.com

 

 

Take a look at the above listing, for example. The price of an original Quiksilver T-shirt is usually between 25-35 euros. Here, this Wish seller offers it for 8 €. While we haven’t run a test purchase so we can’t be totally certain this is a counterfeit product, but the significant price difference definitely points in that direction.

 

The DSA could indeed be a game changer in the right direction. If online marketplaces face legal obligations to vet their sellers before allowing them access to their platform, third party sellers with dishonest intentions would have a much harder time to set up shop.

 

Obviously, this largely depends on the actual vetting process marketplaces will have to put in place, how serious it is, and how it is enforced. But for now, let us be optimistic and assume that the process will be sensible, effective and strictly enforced.

 

Unfortunately, even the strongest rules can be circumvented and we can’t assume that as of the date the DSA will start to apply, counterfeiters will disappear from the internet. However, their numbers could be significantly reduced, at least until they find their way back somehow, and at least in Europe.

 

 

We also like the idea of trusted flaggers reporting illegal content like counterfeit product listings online. Actually, globaleyez already does that: we monitor marketplaces to find IP infringing listings on over 150 online marketplaces worldwide, we check for infringing content on social media as well as domains and images on the entire internet.

 

Then we contact the marketplace/web hoster/registry or registrar in question and ensure the removal of the illegal content from the internet. We have an excellent working relationship with most of these service providers who tend to act quickly and efficiently upon our removal requests. Therefore, we can attest that this process works really well and we see no reason why trusted flaggers under the DSA wouldn’t reach a similar level of success.

 

Of course, who the trusted flaggers will be, what kind of agreement they’ll have with the platforms and what criteria they’ll use as a basis of their work remains to be seen.

 

 

The DSA brings along a significant shift in the oversight of online content in Europe. We hope the rules will be implemented effectively and will indeed contribute to the reduction of illegal content, including IP infringements.

 

However, we can’t expect that counterfeiters will just close up shop. Fraudsters are known for always finding a way, which means that you can’t relax and wait for the DSA to protect your brand. You need to take active steps to avoid any damage caused by IP infringing content and products.

 

Take the first step now and reach out to us to start building a tailor-made online brand protection programme for your brand.