Tech Giants to Face New Sweeping EU Regulations

Margrethe Vestager, European Commissioner for A Europe Fit for the Digital Age, speaks at a news conference on the Digital Services and Digital Markets Acts at the European Commission headquarters in Brussels, Belgium on Dec. 15, 2020. Olivier Matthys/Pool via Reuters File Photo

The world’s largest tech giants will now have to comply with new European Union regulations coming into effect this week, which will broadly affect their global operations.

Starting on Aug. 26, the sweeping EU Digital Services Act (DSA) will broadly affect everything from social media content moderation, user privacy, transparency, and combating counterfeit goods sold online.

The EU law also attempts to prevent the spread of personally harmful content or disinformation, ban or limit certain user-targeting advertising practices, and make companies share some internal data with regulators.

The DSA is the most ambitiously widespread effort passed by policymakers to regulate the tech industry and is intended to force companies to implement major software changes or face massive fines.

Any company found in breach of the new act will face a fine of up to 6 percent of its global turnover, and repeat offenders may be banned from operating in the EU altogether.

Big Tech Platforms Face EU Regulatory Deadline

Some online platforms have already made changes to avoid facing billions in fines for non-compliance.

Although the DSA passed last year, the big tech companies have had until this week to prepare for its enforcement.

The expiration of the compliance period has put pressure on tech platforms, with more than 45 million users in the EU to follow the obligations set out in the legislation.

The new rules for online platforms will apply to 19 companies for now, including Amazon, Apple, Google, Meta, Microsoft, Snapchat, X, TikTok, and many others.

Strangely, some platforms, like eBay, Airbnb, Netflix and even PornHub, were omitted from the list, but it is possible that they may be added later on.

Pornhub, which declared only 33 million digital visitors in the bloc, has been in the crosshairs of regulators and law enforcement for hosting illegal and violent content like rape and child molestation.

They will face fewer obligations than the other platforms for now and have until February 2024, when the DSA will be applied to all online platforms providing digital services to Europeans, regardless of size.

The European bloc has been the global leader in tech regulation, and even more laws are being planned down the road, such as the Digital Markets Act and the AI Act.

Analysts expect that the implementation of such laws will influence similar rules regulating tech firms around the world.

Brussels said that the DSA intends “to establish a level playing field to foster innovation, growth and competitiveness both in the European Single Market and globally.”

European policymakers have been attempting to regulate the power of Silicon Valley and the wider tech industry for years.

The 27-nation bloc has said it was concerned about the protection of Europeans’ fundamental right to privacy and freedom of speech.

However, some civil liberties advocates fear that instead of protecting free speech, the new law may be used by authorities in Brussels to crack down on unpopular views.

“Who will get to define what actually constitutes mis/disinfo? Surely, it will be the job of an [independent] regulator/ judicial authority with at least clear procedural params [and] no/few conflicts of interest. But no. The ultimate decider will be...the EU Commission,” said one European commentator in a post on X.

“The real test begins now,” said European Commissioner Thierry Breton, who vowed to “thoroughly enforce the DSA and fully use our new powers to investigate and sanction platforms where warranted.”

Amazon and Zalando Challenge Inclusion

Meanwhile, two of the platforms on the list, Amazon.com and German fashion retailer Zalando, are currently contesting their inclusion in court.

Amazon, which has 181 million users in the EU, filed a legal challenge in July, saying it was unfairly singled out, unlike its larger rivals, which had not been designated.

Despite its court challenges, Amazon said it would be ready to comply with the DSA while awaiting a final decision from the EU General Court in Luxembourg.

Amazon will include DSA-compliant features, such as a new channel for users to report incorrect product information.

Zalando complained that it had only 31 million European visitors on its platform and that it had “zero risk of illegal content” because of its model, but will still make the necessary changes to be compliant with the law.

“Generally, Zalando doesn’t have systemic risk (that other platforms pose). So that’s why we don’t think we fit in that category,” Aurelie Caulier, Zalando’s head of public affairs for the EU, told the Associated Press.

Still, she said that her company does agree that the DSA “will bring loads of positive changes” for consumers.

Tech Platforms Race to Become Compliant

The European Commission made an offer a few months ago to conduct DSA “stress tests” with the 19 firms included on the list.

The stress tests examined whether these platforms could “detect, address and mitigate systemic risks, such as disinformation,” a European Commission spokesperson told Reuters.

Facebook, Instagram, Twitter, TikTok, and Snapchat accepted the offer and participated in the tests, but it was found that more work needed to be done by these firms to comply with the DSA.

The 19 platforms have also rolled out various new changes to comply with the new rules.

The DSA’s prohibition on targeting certain vulnerable groups such as children with ads has forced platforms like Snapchat and TikTok to prevent ads from from targeting minors based on their online activities.

Google will also provide more information about targeted ads shown to EU residents and give government-affiliated researchers more access to data on how its products work.

European users now have the option to flag illegal online content and suspicious products, which the platforms must take down swiftly and objectively.

The DSA “will have a significant impact on the experiences Europeans have when they open their phones or fire up their laptops,” Nick Clegg, Meta’s president for global affairs, said in a blog post.

Meta said that its existing tools on Facebook and Instagram that report negative or offensive content will be easier to access.

Google said it would offer more transparency for content moderation decisions and provide users different ways to contact the company due to a new DSA rule that forces platforms to inform users why posts were taken down.

TikTok also installed a user option to flag video content for things like hate speech and harassment, or frauds and scams, which will be reviewed by a team of experts, said its parent company, ByteDance.

Facebook, Instagram, TikTok, and Snapchat will give users the ability to turn off automated systems that recommend videos and posts based on their profiles, which have been attacked by critics for encouraging some social media users to commit acts of violence.

Wikipedia will also start tweaking some policies and modify its terms of use to provide more information on “problematic users and content.”

The changes will not be limited to the EU and “will be implemented globally,” according to the nonprofit Wikimedia Foundation, which runs the online encyclopedia.

Snapchat will first roll out its DSA-compliant changes on content flagging in the EU and then globally over the coming months.

Reuters and the Associated Press contributed to this report.