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Digital Services Act

The European Commission, as part of its commitment to revising internal market rules for digital services, has started a re-assessment of the e-Commerce Directive. While digital technologies and business models have continued to rapidly develop, EU rules for digital services have remained majorly unaltered since the adoption of the Directive in 2000.

In turn, the European Parliament has since fervently pushed for the revision of EU rules applicable to digital platforms. Indeed, the Internal Market and Consumer Protection (‘IMCO’), the Legal Affairs (‘JURI’) and Civil Liberties, Justice and Home Affairs (‘LIBE’) committees have each proposed a report to review existing laws applicable to online providers. While all three committees agree that the Directive’s general principles, such as the country of origin principle, the limited liability regime and a ban on general monitoring obligations, are to remain unchanged, a number of proposals have been pushed forward.

IMCO Committee Report

The IMCO Committee’s report intrinsically advocates for the improvement of the functioning of the single market. The report emphasises that EU legislation should be widened to reflect the emergence of new information society services. However, it considers that measures should distinguish between whether digital services target consumers and the general public, or whether they target business users. Such rules should also apply to non-EU providers that offer goods and services within the EU.

The report recommends that EU law tackles counterfeit and unsafe products. The Commission should thus consider the implementation of a ‘know your business customer’ mechanism. Platforms would be required to monitor and prohibit fraudulent companies from utilising their services to sell illegal and unsafe products and content. Additionally, a notice-and-action mechanism should also be considered to allow for the removal and blocking of ‘illegal content’ as stipulated in EU or national laws.

The committee has also proposed that targeted advertising practices and artificial-intelligence driven services be subject to more stringent regulation and transparency regimes, respectively.

JURI Committee Report

The JURI Committee report recommends commercial and civil law rules for commercial entities operating online. The report suggests that regulatory approaches to ‘legal’ and ‘illegal’ content should be employed differently. Focus should instead be on how hosting platforms moderate content and how ‘notice and action’ procedures are established to safeguard users’ rights.

The report further recommends that the Commission considers imposing content management and transparency obligations on platforms, as well as adopting regulatory measures to better handle targeted advertising. It further suggests that civil and commercial aspects of distributed ledger technologies and smart contracts should be regulated.

LIBE Committee Report

Primarily focusing on fundamental rights posed by online platforms, the LIBE Committee report stresses that the present EU legal framework on digital services should be amended to address challenges brought on by new technologies. The report emphasises that legal clarity and observance of fundamental rights is to be ensured.

Moreover, content takedown measures should only be applied vis-a-vis illegal content. Necessary procedural safeguards, as well as transparency obligations, should be harmonised and account for human oversight and, additionally, include effective judicial redress.

Next Steps

The European Parliament is set to vote on all three reports during the October II plenary session.

News update by Legal Trainee Ms Emma-Marie Sammut.

For more information or assistance on e-Commerce and related issues please contact Dr Ian Gauci and Dr Terence Cassar.

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.