Big Tech prepares for EU’s Digital Services Act launch.

Big Tech Faces Unprecedented Legal Scrutiny as EU’s⁤ Digital Services Act Takes Effect

By Martin ⁣Coulter

LONDON (Reuters) – More than a dozen of the world’s biggest tech companies face unprecedented legal scrutiny, as ⁢the European⁢ Union’s sweeping Digital Services Act ⁤(DSA) imposes new‍ rules on content moderation, user⁣ privacy, and ​transparency this month.

Across the EU, a host of internet giants – including Meta’s Facebook and Instagram platforms, Chinese-owned‌ video app TikTok, and a handful of Google services – are adapting to ⁤the new obligations, including preventing harmful content from spreading, banning or limiting certain user-targeting practices, and sharing⁢ some internal data with regulators and associated researchers.

The EU is seen as the ​global leader in⁢ tech regulation, with more wide-ranging pieces of⁤ legislation –⁣ such as the Digital‍ Markets Act and the AI Act – on the way. The bloc’s success in implementing such laws will influence the introduction of similar rules​ around the world.

But researchers have raised questions‍ over whether these companies have done enough to meet ‍lawmakers’ expectations.

For now, ⁢the rules ‍only apply to 19 of the largest‍ online platforms, those with more than 45 million users in the EU. From mid-February, ⁣however,⁢ they ⁢will apply to⁢ a variety of online platforms, regardless of ⁢size.

Any firm found in breach of the DSA faces‌ a fine worth up to 6% ‌of its ⁣global turnover, and repeat offenders may be banned from operating⁣ in Europe altogether.

Reuters asked each company designated under the DSA to discuss changes they had made. Most⁢ pointed to public blog posts on the matter, declining to comment further, or did not respond at all.

Two of the companies singled out for early regulation – e-commerce giant Amazon‍ and‌ German fashion retailer Zalando – are currently ⁤challenging ⁢their inclusion on the list in court.

“We can expect that platforms will fight tooth and nail to defend their practices,” said Kingsley Hayes, head of data and ⁣privacy litigation at law⁣ firm Keller Postman. “Especially when new compliance rules encroach on​ their core⁤ business models.” ⁣‌

Stress Tests

Over the past few months, the European Commission said it had offered to conduct DSA ⁣“stress⁣ tests” with the 19 platforms.

Such tests assessed whether ⁢these platforms could⁢ “detect, address and mitigate systemic ⁣risks, such as disinformation,” a Commission spokesperson said.

At least five platforms have participated in such tests — Facebook, Instagram, ⁣Twitter, TikTok, and Snapchat. In each case, the ⁣Commission said more work was needed to prepare for the​ DSA.

Now, just as⁢ the⁢ rules come into effect, research published on Thursday by nonprofit Eko shows Facebook was ​still approving online⁤ ads containing harmful content.

The organization submitted 13 ads containing harmful content​ for approval, including one‌ inciting violence​ against immigrants‌ and another calling for the assassination of a prominent Member‌ of the European Parliament (MEP).

Eko said Facebook approved eight‌ of the submitted ads within 24 hours and rejected five. Researchers removed the ads before they were published, so no Facebook users saw them.

In response to the Eko research, Meta said, ⁢“This report was based on a⁣ very small sample of ads and is not representative of the number of ‌ads we review daily across the world.”

This year⁢ Global Witness, another nonprofit, claimed Facebook, TikTok, and Google’s YouTube had all approved ads inciting violence against the LGBT (lesbian, gay,‍ bisexual, and transgender) community in Ireland.

Responding to ⁤the Global Witness research, both Meta and TikTok said at ⁣the time that ⁣hate speech had no place on their platforms, and that they regularly review and‍ improve their procedures. Google did not respond to a request for comment.

While none of the designated companies have said they will ‍disobey the DSA, Amazon and Zalando have disputed their inclusion on the list.

In July, Amazon ⁤filed a legal challenge with the Luxembourg-based General Court, Europe’s ⁤second highest, arguing that bigger rivals in these countries had not been designated.

It ⁢has still introduced a number of new features as​ part⁤ of its DSA compliance program, such as‌ a ⁣new⁢ channel for users to report incorrect product information.

Fashion retailer Zalando launched a similar legal challenge, arguing​ that because only 31 ⁣million monthly active users bought⁣ from third-party sellers on its​ platform, it fell below the 45 million user threshold.

It will soon ⁣become obvious‍ if any of the designated companies had “skirted their legal responsibilities,” said Hayes. “Ironing these obligations out ​will be a tricky⁣ business for any ​platform with a large user base.”

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