The Digital Services Act: A step closer to a safer online environment
Michal Kardoš is the Executive Director of The Slovak Alliance for Innovation Economy (SAPIE)
The Digital Services Act (DSA) is a part of the European Commission’s vision for Europe’s digital future. It is designed to shape a safer online environment, also to tackle issues like illegal and harmful content online including content such as hate speech, disinformation and illegal online sale of goods and services. It is also an opportunity to harmonise the online content in Europe and create a comprehensive legislation that could also set some global standards.
But, there are many uncertainties as the DSA moves off the pages into the real world, particularly for those who must figure out how to follow and apply these rules. These uncertainties were discussed at our recent co-organised SAPIE and CDA event, where we were joined by policymakers and stakeholders from Central and Eastern Europe to discuss what the DSA means for users and for SMEs who use these affected digital services.
Our panel included Michal Kardoš, Executive Director, SAPIE; MEP Ivan Štefanec (EPP, Slovakia); Júlia Schvarcová, Government Affairs and Public Policy, Google; Michal Kanownik, President, ZIPSEE Digital Poland; Daniel Všetečka, Director, Digital Economy and Smart Specialisation, Ministry of Industry and Trade of the Czech Republic; and Michal Boni, Spokesperson, Coalition for Digital Ads of SMEs (moderator).
One area of common concern relates to new obligations placed on intermediaries including “Know Your Business Customer” (KYBC) and trader-verification requirements. These will require online marketplaces to obtain proof of trader identity as well as make it mandatory for platforms to undertake trader-verification checks. The European Parliament wants to take this a step further, requiring intermediaries to make “best efforts” to identify and prevent the dissemination of illegal products and services, including through mechanisms such as spot checks.
Despite the goal of the DSA to ensure a level playing field, concerns were raised at our event that this proposal, particularly with the Parliament’s amendments, would make business difficult for SMEs. This is because SMEs would have to provide a lot more proof and paperwork just to list their products on an online platform, sucking up resources that are simply not available in this difficult business climate.
On this point, Daniel Všetečka, Director, Digital Economy and Smart Specialisation, Ministry of Industry and Trade of the Czech Republic, highlighted that while KYBC provisions are important to protect against counterfeit products, “we need to balance” for enterprises and the protection of consumers. Google’s Júlia Schvarcová echoed this, highlighting that the proposed extension of trader identification and checks requirements would incentivize platforms to work with large traders in order to reduce risks and therefore edge SMEs out.
Targeted advertising is another example. MEP Ivan Štefanec recognised that targeted advertising was “the tool for SMEs for the future”. Throughout the pandemic, SMEs have utilised targeted advertising to reach customers across Europe when stores were forced to close. For SMEs, targeted advertising represents an affordable way to reach consumers who are genuinely interested in purchasing their products or services. These ads are often much more efficient than contextual advertising and existing legislation provides all the privacy protections required.
Panellists largely welcomed the fact that the European Parliament stopped short of calling for a full ban on targeted ads but cautioned that the DSA could still make it harder for SMEs to market their goods and services online, depending on how some crucial clauses are finalised.
As Michal Kanownik, President, ZIPSEE Digital Poland, eloquently said, the DSA might be “a rare opportunity to regulate the single market in favour of activity rather than against activity”. The DSA could miss this opportunity, leading to a less dynamic digital economy in Europe if it overloads SMEs with regulatory burdens and makes vital tools for growth, such as targeted advertising, more difficult.
