On November 16, 2022, the Digital Services Act (DSA) entered into force.[1] It regulates the obligations of digital content service providers that enable consumers to access goods, services, and digital content. The DSA aims to complete the Digital Single Market and establish liability and safety rules for digital platforms. The most significant changes involve increased transparency requirements for online platforms and stricter public oversight of online platforms at the national and EU/EEA levels. This briefing focuses on the practical implications for businesses operating in the online environment.
The DSA applies to a wide range of online intermediaries. A distinction is made between intermediary services, hosting services, online platforms, and very large online platforms. A key factor in determining applicability is that the online intermediaries offer their services within the EU/EEA internal market. Small and micro-enterprises are excluded.
The DSA took effect on November 16, 2022. Online platforms have until February 17, 2023, to publish the number of active end users on their websites. However, as of February 17, 2024, the DSA will apply directly throughout the EU/EEA.
The obligations arising from the DSA vary depending on the entity. The criteria for distinguishing between online entities are based on size, influence, and role.
There are four categories of entities: online intermediaries, hosting service providers, online platforms, and very large online platforms. Each of these categories has specific obligations to fulfill.
Pursuant to Article 52(3) of the DSA, the Commission may have direct supervisory and enforcement powers over very large online platforms. In serious cases, Member States may impose fines of up to 6 percent of the global annual turnover of the intermediary service provider in question. Member States shall ensure that the maximum amount of fines that may be imposed for providing incorrect, incomplete, or misleading information; for failing to respond to or correct incorrect, incomplete, or misleading information; and for refusing to allow an inspection, is 1% of the global annual turnover of the intermediary service provider or the person concerned in the preceding fiscal year. Article 52(4) of the DSA provides that Member States shall ensure that the maximum amount of a periodic penalty payment is 5% of the average daily global turnover or average daily global revenue of the relevant intermediary service provider in the preceding fiscal year, calculated from the date specified in the relevant decision.
The DSA has extraterritorial scope. This means that the DSG applies not only to providers within the EU/EEA, but also to service providers who offer their services to customers in EU/EEA member states, regardless of where they are authorized to operate. Swiss companies with customers in EU/EEA member states are therefore directly affected. Depending on the status of the Swiss online operator, Swiss companies are expected to comply with new obligations under the DSG. Swiss companies must continue to appoint a legal representative in the EU/EEA if they are subject to the DSA. This representative may be a natural person or a legal entity. Swiss companies must provide the competent authorities of the member states in which they offer their services with information about the legal representative and ensure that this information is publicly available, easily accessible, accurate, and kept up to date (see Art. 13, paras. 1–4 of the DSA).
[1] Regulation (EU) 2022/2065 of the European Parliament and of the Council of October 19, 2022, on a Single Market for Digital Services and amending Directive 2000/31/EC, OJ L 277, October 27, 2022.
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