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EU Digital Services Regulation

Article authored by Stella Kaprāne (Njord Law)

Digital Services Regulation Implementation Period Quickly Approaches
Our Latvian contributor, Njord Law, sets out the aims of the Regulation applicable to online intermediary platforms and other online service providers starting in the EU, starting February 2024.  

Digital Services Regulation (Regulation (EU) No. 2022/2065 of the European Parliament and of the Council of 19 October 2022) requirements in regards to content censorship and other obligations was applicable to large online platforms and very large online search engines companies and company groups with an operational threshold set at 45 million EUR since 16 November, 2022.

However, the Regulation becomes universally applicable to other online intermediary platforms and other online service providers operating in the EU and other countries regardless of their turnover, if their services are targeted towards EU consumers and other service recipients, starting 17 February 2024.

The aim of the Regulation is to ensure a safe and secure online environment and to prevent the publication of an illegal content and other illegal activities online. The illegal content for the purposes of the Digital Services Regulation includes, for example, sharing child sexual abuse images, illegal sharing of private images without consent, cyberstalking, providing regulated services online without the appropriate license or permit, selling inappropriate or counterfeit products, products or services in breach of consumer protection rules, unauthorized use of copyrighted material, etc.

The scope of the Regulation covers the internet exchange points, cloud sites, web hosting services, virtual networks and a variety of other services, as well as it will impact the gambling sector and its online services, including online casino’s. If the content is deemed to be an illegal content, for example, the gambling services are targeted towards EU country inhabitants and the necessary registration requirement in the particular state register has not been fulfilled, as well as the license for the service provision has not been obtained or other illegal activity is conducted, the illegal gambling services content must be taken down by the internet service provider or other Regulation subject.

The Regulation, for example, requires, that when the service recipient communicates with the chatbots, this must be indicated in the online site. The reasons also must be clearly stated (and the information regularly updated) on the basis of which online intermediary service providers may restrict the provision of their services and the service recipients must be clearly informed of any significant changes to the terms of use of the platforms.

In the case of inappropriate content, the abuser should be temporarily suspended from providing his/her relevant activity and the content should be deleted, and there should be avenues for challenging the decisions taken by platform providers. In addition, it should be noted that these provisions do not exclude the application of consumer rights, intellectual property rights and other special rules to the online environment.

For the breaches of the Regulation fines are applied – the maximum amount of fine is 6 % of the annual worldwide turnover for the provider of intermediary services concerned in the preceding financial year. The maximum amount of the fine that may be imposed for the supply of incorrect, incomplete or misleading information, the failure to reply or rectify incorrect, incomplete or misleading information and for the failure to submit to an inspection is 1 % of the annual income or worldwide turnover of the provider of intermediary services or person concerned in the preceding financial year. Whereas the maximum amount of a periodic penalty payment is 5 % of the average daily worldwide turnover or income of the provider of intermediary services concerned in the preceding financial year per day, calculated from the date specified in the decision concerned.