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EU approved Digital Services Act to regulate large multinational tech companies’ activities

  • Category
    International Relations
  • Published
    4th May, 2022

Context

In a major development that could alter the entire social media landscape, the European Union has finally reached consensus on the Digital Services Act (DSA) to increase the regulation on social intermediaries.

Background

  • European Union has introduced E-commerce Directive in 2002 to regulate over the e-commerce platforms.
  • Now, it has passed the new act to fill the gap and flaws remained untouched by the decade old act.
  • With this, the European Union has continued its campaign to regulate large multinational tech companies’ activities in Europe.
  • The Digital Services Act (DSA), which was approved by the European Parliament, follows the Digital Markets Act (DMA).
  • The DSA and DMA have two big goals:
    • create a safer digital space in which the fundamental rights of all users of digital services are protected
    • establish a level playing field to foster innovation, growth, and competitiveness, both in the European Single Market and globally
  • In practice, this means overseeing how large social networks, search engines, and other tech companies do business, and limiting how they use consumer data.

Analysis

Why new legislation is needed?

  • E-commerce directive rules covered the broad ideas and objectives that was significant during that decade.
  • With technological shifts the decades old legislation lacks some scope of legislation which needs to be fulfilled.
  • Untouched scope of the legislation
    • Taxation
    • Processing of Personal data
    • Protection of privacy in the electronic communication.

What is the new law?

  • Digital Services Act along with Digital Markets Act will replace the decade old legislation E-Commerce directives of 2002
  • Digital Services Act (DSA), a landmark legislation to force big companies to act against disinformation.
  • DSA ensures regulation over way intermediary.

What is EU Digital Service Act?

  • The DSA is a digital regulation that follows the principle of ‘what is illegal offline must also be illegal online’ and aims to stop the dissemination of illegal content as well as protecting the fundamental rights of EU citizens. 
  • The DSA will tightly regulate the way intermediaries, especially large platforms such as Google, Facebook, and YouTube.
  • It aims to legislate against the spread of illegal content and to add further measures for ensuring the protection of the fundamental rights of European citizens.
  • The regulation includes specific requirements for the protection of minors, online marketplaces, online platforms, and search engines, with stricter requirements implemented proportionately for
    • ‘very large online platforms’ (VLOPs)
    • ‘very large online search engines’ (VLOSEs)
  • The DSA also includes rules for the use of misleading interfaces, including Dark Patterns, and for transparency in the use of recommender systems.

Some of the rules set by the DSA are similar to those in India’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, also known as the IT Rules, 2021.

  • In India, the IT Rules, 2021, made it mandatory for ‘significant’ social media intermediaries, or online platforms with more than 5 million registered users in India, to appoint a grievance redressal officer.
  • The latter is required to acknowledge a user’s grievance within 24 hours of receipt of the complaint, and offer a resolution in the next 15 days.

What are the provisions?

  • Applicability: DSA will apply to a “large category of online services, from simple websites to Internet infrastructure services and online platforms.”
  • Faster removal: Online platforms and intermediaries will have to add “new procedures for faster removal” of content deemed illegal or harmful.
  • Risk reduction analysis: This law has mandated the companies to have a risk reduction analysis to reduce the incitements in the society. The potential risks that DSA has provisioned are:
    • Dissemination of Illegal Content
    • Adverse effect on fundamental rights
    • Gender based violence
    • Serious consequences of mental and physical health
  • Dark Pattern Ban: New legislation has proposed to ban the Dark Pattern and misleading interface specially pop ups which creates discrepancies to the consumers and targeted advertising

Dark Pattern

  • The dark patterns in UX design are tricks used to manipulate and redirect a user to perform a forced action, which they do not intend to perform.
    • Example: A typical example of a dark pattern is the gated content that does not allow you to access a website as sign-up is the only option if you wish to continue.
  • Access to public data: The Act proposes to allow independent vetted researchers to have access to public data from these platforms to carry out studies to understand these risks better.
  • Strong protection: The law proposes stronger protection for minors, and aims to ban targeted advertising for them based on their personal data.
  • Transparency measures: It also proposes “transparency measures for online platforms on a variety of issues, including on the algorithms used for recommending content or products to users”.
  • Finally, it says that cancelling a subscription should be as easy as subscribing.

Conclusion

European Union has proposed to adopt the new legislation regarding the e commerce services to protect the interest of the public and increase the regulations on unlawful content posted on the social media. The new law focuses on minors and gender based violence in the society, to improve the social harmony and reduce the social violence new legislation has increased the liability of the way intermediary regarding removal of any unlawful content. Apart from such restrictions DSA also creates a balance and provides a safe harbor to these big way media platforms.

Practice Questions

Q1. India and the EU aim to operationalize their natural strategic partnership by establishing Trade and Technology Council. Comment.

Q2. Indian Diaspora can play a constructive role in strengthening India- EU relationship. Elaborate.

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