The European Union’s (EU) Digital Services Act (DSA) is a proposed piece of legislation that aims to regulate the digital economy within the EU. The DSA is intended to provide a framework for the EU to address the challenges posed by the rapid growth of the digital economy, including issues related to competition, consumer protection, and the free flow of data within the EU.

One of the key provisions of the DSA is the creation of a new category of “very large online platforms” that would be subject to additional regulatory oversight. This category would include companies that have more than 45 million monthly active users in the EU, or that have annual revenues of more than €6.5 billion. These platforms would be required to comply with a number of new rules, including requirements to provide greater transparency around their algorithms and to share data with competitors.

The inclusion of this new category of platforms has raised concerns among some industry experts, who argue that it could create a burden for companies that are already facing significant regulatory challenges. For example, large online platforms that operate in multiple countries may already be subject to a variety of different rules and regulations, and the additional requirements of the DSA could create additional compliance challenges.

Another provision of the DSA is the introduction of a new “duty of care” that would require online platforms to take greater responsibility for the content that is published on their sites. This would include a requirement to remove illegal content within a certain timeframe, as well as a requirement to take proactive measures to prevent the spread of harmful content, such as hate speech or disinformation.

While the intention of this provision is to protect consumers from harmful or illegal content, some have raised concerns that it could have unintended consequences. For example, the requirement for platforms to remove illegal content within a certain timeframe could create a significant burden for companies, particularly if the definition of “illegal content” is not clearly defined. Additionally, there are concerns that the “duty of care” could lead to over-censorship, as platforms may err on the side of caution and remove content that is not necessarily illegal but could be considered controversial or offensive.

The DSA also includes provisions that would give national regulators the power to impose significant fines on online platforms that fail to comply with the new rules. This could include fines of up to 10% of a company’s global annual revenues, or up to €3 million for individual offenses.

While the intention of this provision is to provide a deterrent against non-compliance, some have argued that it could create a disincentive for companies to innovate and take risks. The potential for large fines could make it more difficult for companies to invest in new technologies or business models, as they may be hesitant to do so if there is a risk of being penalized.

There are concerns that the DSA could have a negative impact on small and medium-sized enterprises (SMEs) that operate within the EU. In particular, the requirement for online platforms to share data with competitors could make it more difficult for these companies to compete with larger, established players. Additionally, the increased regulatory oversight and potential for large fines could create a burden for SMEs that may not have the resources to comply with the new rules.

The DSA is currently in the proposal stage, and it is not yet clear when it will be finalized and implemented. However, it is expected to have significant implications for the digital economy within the EU, and companies that operate online platforms should be aware of the potential impact of the DSA on their business. It is important for these companies to stay informed about the progress of the DSA and to engage with policymakers to ensure that the final legislation is fair and balanced.