Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (“Digital Services Act”, “DSA”) is a core measure shaping Europe's Digital Future strategy. The Digital Services Act is intended to address the challenges resulting from the increasing dynamic of cross-border trade through online intermediaries providing services in the European Union.
As of 17 February 2024, the Digital Services Act will be fully applicable in all Member States of the European Union.
The main objectives behind the enactment of the Digital Services Act are to strengthen the European Union's internal market and to protect consumers by providing a safer digital space. The achievement of these objectives is associated with the imposition of obligations on digital service providers to ensure:
- equal treatment of offline activities and electronically provided services;
- transparency in provision of advertising content;
- respect for fundamental rights and freedoms of consumers.
The regulation covers electronically supplied services, which includes: online marketplaces, social networks, content sharing platforms, app shops, travel and accommodation platforms, Internet service providers and domain registrars, as well as cloud and hosting services.
The Digital Services Act has divided the providers of the above-mentioned services into groups. Being part of a particular group determines the scope of the new obligations resulting from DSA. The scope of obligations is as follows:
- obligations applicable to all intermediate service providers;
- additional provisions applicable to providers of hosting services, including web-based platforms;
- additional provisions applicable to online platforms;
- additional obligations imposed on providers of Very Large Online Platforms ("VLOPs") and Very Large Online Search Engines ("VLOSEs") with regard to systemic risk management.
It is worth noting in particular that provisions of the Digital Services Act cover activities of entities established not only in EU member states, but also outside the EU provided that the recipients of the services offered by these entities are established or located in the European Union.
The provisions regulating advertising are aimed at online platform providers. Although the Digital Services Act is addressed to providers of online content intermediation services, it will certainly have an impact on all online advertising operators. The reason for this is that practices which are prohibited or restricted in relation to advertising on online platforms determine prohibited advertisements. The advertising transparency obligations imposed on platforms will also affect advertisers themselves.
Online advertising, also known as digital advertising, is a kind of advertising that uses the Internet to target and deliver marketing messages to customers. This means that the efficiency of such advertising depends on the ability to match the ad to the consumer's interests and likelihood of purchase or interest in the content of the ad, or more generally profiling ads on the basis of information collected.
The Digital Services Act defines advertisement as: information designed to promote the message of a legal or natural person, irrespective of whether to achieve commercial or non-commercial purposes, and presented by an online platform on its online interface against remuneration specifically for promoting that information.
According to the DSA, it is prohibited to present profiling-based advertising on online platforms using special categories of personal data (sensitive data), which means data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetic and biometric data or health data.
Another prohibition is meant to protect minors using online platforms, namely presentation of profiling-based advertising using the personal data of a recipient who is a minor (based on any type of data, sensitive or otherwise) is not allowed. Providers of online platforms accessible to minors shall put in place appropriate and proportionate measures to ensure a high level of privacy, security and protection of minors within their services.
Additional obligations have been imposed to increase transparency of advertisements displayed on the platforms. In particular, the DSA requires that the following information be displayed on each advertisement in real time:
- clear indication that the information presented is an advertisement (e.g. use of visible indications);
- informing who is a person (natural or legal) on whose behalf the advertisement is presented;
- indicating who paid for the advertisement (if this does not correspond to the advertiser mentioned above);
- provide relevant information on the main parameters used to determine the recipients to whom the advertisement is presented (e.g. depending on whether the advertisement is contextual or belongs to a different type) and, if applicable, on how such parameters are modified.
The aforesaid obligations aimed to enforce transparency place a significant burden on all platforms. In addition, it is required to identify the 'chain' behind the display of a particular advertisement, as well as to disclose the underlying criteria that lead to specific profiling. The ultimate goal of DSA is, in fact, to ensure that users are fully aware of being 'targeted', meaning that the advertising is intended to be more effective because it is targeted specifically at them. While it is not possible to fully determine the implications of the above obligations, the obligations are likely to have a disruptive impact on the online advertising market.
An independent body in each EU Member State, called the Digital Services Coordinator, is to be responsible for compliance with DSA. In Poland, such a body still has not been designated.
The DSA establishes various types of sanctions for violations of the Regulation, including heavy fines. According to Article 52 ("Penalties"), the maximum amount of fines that may be imposed for a failure to comply with an obligation laid down in the Digital Services Act is 6 % of the annual worldwide turnover of the provider of intermediary services concerned in the preceding financial year.
Recipients of the service and any body, organisation or association mandated to exercise the rights conferred by the DSA on their behalf have the right to lodge a complaint against providers of intermediary services alleging an infringement of the DSA with the Digital Services Coordinator of the Member State where the recipient of the service is located or established.
In addition to the administrative sanctions regime, the DSA also provides for the possibility of imposing damage compensation.