On 23rd April 2022, the political agreement on the Digital Services Act (DSA) was reached between the EU Member States and European Parliament. According to the Brussels’ press release, the DSA will set out new rules for “the accountability of online platforms” , offer a better protection for “internet users and their fundamental rights”, and facilitate “innovation, growth and competitiveness” within the EU market. However, could single legislation of DSA become a turning point in regulating Big Tech? Alternatively, is it a sluggish response to the decades of encroachment of digital services?
What is the DSA?
The DSA is a regulatory framework that will impose rules on online intermediaries and platforms operating in the context of digital services, which can be defined as “a large category of online services, from simple websites to internet infrastructure services and online platforms.” In detail, the types of digital services will cover online marketplaces, social networks, content-sharing platforms, app stores, online travel and accommodation platforms, intermediary services, cloud and web hosting services, and collaborative economy platforms. As long as these digital services conduct business in the EU, they will be subject to the DSA. Among them, online platforms, such as Twitter, Meta (Facebook) and TikTok, will be at the core of regulation in regard to how they moderate content, advertise, and use algorithmic processes.
Too big to care or too small to care?
Thierry Breton, Commissioner for the Internal Market, commented: “With the DSA, the time of big online platforms behaving like they are “too big to care” is coming to an end.” Admittedly, by exerting onerous obligations on the aforementioned Big Tech, the DSA will have established horizontal rules to ensure accountability around how they create a safe online environment. Steep fines – up to 6 per cent of their global turnover or even a ban on operating in the EU – will further alarm Big Tech to take each endeavour for compliance with the DSA. It remains to be seen whether the enforcement of the DSA will be equally applicable to providers of small and medium-sized enterprises (SMEs).
It is also important to note that, following the proportionality principle, online platforms with larger role, size and impact undertake a higher level of transparency reporting obligations, while SMEs do not need to so. The regulator’s intention to put Big Tech into the spotlight could potentially deflect SMEs from equivalent compliance. SMEs may not feel an urgency to participate in this accountability framework, in that Big Tech has drawn all attention of regulators and public media. It would therefore be ideal if the obligation to equality before the DSA could be applied to enterprises regardless of their sizes or market influences.
Algorithms transparency or technology transfer?
The DSA also mandates online platforms to be transparent about their algorithms, if these platforms reach more than 10% of the EU population. Algorithms are “a specific set of instructions, which allow the computer to do everything”. They could be utilised by online platforms to optimise searches, predict what users are interested in, and serve high-interest posts, videos or advertisements to every user. Algorithms are top commercial secrets for tech companies. In many ways, asking tech companies to be transparent about algorithms is analogous to forcing Coca Cola to disclose its secret formula. After all, the pivotal role played by algorithms for the success of tech companies are the same as the recipe of ingredients for Coca Cola’s high profits. However, there is an unequivocal public need for algorithms that involve automated decision-making to provide some level of transparency.
The balance of the DSA appears to seemingly favour too much transparency in detriment to commercial secrets. As a repercussion, it is conceivable that regulators in the US and China, where Big Tech are headquartered, could enact legislation to prevent algorithms from being disclosed to third-party countries. If this jurisdictional collision happens in the future, would the DSA, even before being directly applicable, get amended to remain mute about algorithms disclosure or stick to its original context?
Public oversight or censorship?
Online platforms continue to be obligated by the DSA to prevent dangerous disinformation or illegal content from going viral. Through these due diligence obligations, Brussels believes that the DSA will guarantee the public oversight around how online platforms shape the information zone where European society thrives. Nevertheless, the concern here is how to determine which information is dangerous or illegal. Although the Article 8 the DSA entrusts national judicial authorities to publish orders guiding the identification of illegal content, time will tell what criteria each national system will use to distinguish legal and illegal content and how likely this could lead to the establishment of a European Great Firewall for censorship. Answer could be hinted by a EU policy paper, calling on Europe to build a “European Internet” that “like the Chinese firewall would block off services that condone or support unlawful conduct from third-party countries.”
Fostering competition or impeding organic growth?
Another benefit of the DSA repeatedly highlighted by Brussels is that the DSA will “foster innovation, growth and competitiveness” within the EU market. Combined with the Digital Markets Act (DMA), its sister legislation, the DSA will level the playing field, where gatekeeper platforms such as Google and Meta damage competition and put SMEs at a disadvantage. Admittedly, in a short term, by restricting big platforms to boost the market competition, the DSA will help smaller providers to scale up. However, it is questionable whether this could persist in the long-term, as the continuous growth of SMEs is determined by the demand and supply of services provided by them. The viable relationship between demand and supply is further correlated to service quality, business strategies and consumer tendency instead of any legal or government interference.
Every coin has two sides. The DSA is not an exception either. Overall, the pros seem to outweigh the cons, taking into consideration the safe and accountable online environment established by the DSA. More importantly, the DSA heralds the global scrutiny over digital services online intermediaries and platforms. It is hoped that countries such as the UK, US, China and Singapore will follow the exemplary step of the European Parliament.
 The Great FireWall refers to the combination of legislative actions and technologies enforced by the authorities to regulate the Internet domestically.