Digital Services Act Brings Changes to Marketing Industry

25 November 2022
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They lived happily ever after… Until one day, the rules regarding transparency on operations online became stricter. The Digital Services Act came into force, imposing additional reporting obligations on most online platforms and services. The idea behind such an initiative was to modernize the consumer protection segment of the Internet and increase the capacity to manage a digital business, but it could potentially threaten those who make money online. Is the fairy tale really over, or is the devil not as bad as he is painted? 

DSA in a nutshell

What? 

The Digital Services Act (DSA) is an innovative European legislation centered around the protection of consumer rights in the online environment. On the other hand, there are digital service providers, who got the stimulation to innovate, grow, and compete within a single market. DSA is one element of the European digital strategy puzzle known as A Europe fit for the Digital Age, along with the relatives Digital Markets Act and Data Governance Act. 

One of the DSA creators and European Commission president Ursula von der Leyen tweeted that the agreement on these act “will protect users online, ensure freedom of expression and opportunities for businesses”.

When?

It was first proposed by the European Commission on 15 December 2020. Since then, there have been several revisions and additions. On 22 April 2022, the Council of the European Union and the European Parliament reached a deal on the Digital Services Act in Brussels, following sixteen hours of negotiations. The DSA finally entered into force on 5 July 2022. 

Who established?

The European Commission, European Parliament, and the Council (the co-legislators)

What was the aim?

Increase transparency in the operations of the digital platforms, along with setting a clear and fair legal framework for all participants of the online environment.

Who will be influenced?

  • Intermediary services offered to EU users, which consist of “caching”, “mere conduit”, and “hosting” services
  • Online search engines
  • Online platforms 
  • VLOPs* (Very Large Online Platforms)
  • VLOSEs* (Very Large Online Search Engines)

*These two terms describe the services, which have a significant societal and economic impact, reaching at least 45 million users in the EU (representing 10% of the population).

Those providers who offer more than one type of online service need to comply with the portions of the DSA that apply to each service.

What will change?

The Digital Services Act has come a long way before its final adoption, so it includes laws covering so many aspects of organizations working online (the final version of the document is over 300 pages long). We will highlight the key ones, and you can check out the official website of the European Commission for a full list of explanations on regulations. 

An updated process for dealing with illegal content. This is based on the principle of “notice & action”. It obliges all digital service providers to allow any user to report potentially illegal content (or products selling online). In response to such reports, platforms are required to take prompt action and, if the illegal nature of content items is confirmed, to remove them. Priority in handling complaints is given to “trusted flaggers”, independent companies with proven experience and expertise in the field.

The next mandatory step for platforms is the transparent notification of all restrictions on the visibility of suspicious content. 

Extended requirements for communication with users. If a customer’s account has been blocked for any reason, his content removed or demoted, the platforms are obliged to provide the affected user with detailed explanations of this situation. Users will have new rights to challenge these decisions with the platforms and seek out-of-court settlements if necessary.

A ban on the use of so-called dark patterns in the interface of online platforms. Dark patterns are as misleading tricks that manipulate users and cause them to take actions they did not intend to take. From this perspective, you need to be careful about which marketing channels you use and how manipulative they are. The same banning mechanism is implemented for targeted advertising for children and deceptive designs.

Less privacy for the sake of accountability. Platforms will now have to share their internal data on recommender systems and online advertising. They should provide customers with at least one recommendation system (or feed) alternative that is not based on profiling, and make it explicit in their terms of service how their content moderation and algorithmic recommendation systems operate. Users should receive explanations of why they were chosen for targeting, as well as instructions on how to modify those algorithms.

Extra requirements for VLOPs and VLOSEs (Facebook, Twitter, Instagram, TikTok, Spotify, Microsoft, Amazon, etc.):

  • to conduct robust self-assessments and risk-mitigation efforts;
  • to appoint an independent compliance officer;
  • to share data with independent auditors, EU and Member State authorities, and researchers from academia and civil society who can scrutinize the data;
  • to commission an annual independent audit, which will yield an audit report; and
  • to follow other stringent transparency requirements.

Digital Services Act Brings Changes to Marketing Industry

Final thoughts

As for affiliate marketing, we can only foresee how much it will affect certain verticals. For instance, the European Lotteries Association (EL), the European Casino Association (ECA), and the World Tote Association (WoTA) welcomed the European Commission’s DSA establishment. Consequently, the gambling vertical is not likely to suffer, but on the contrary, will be able to better monitor and control gambling operators. The same pattern can be applied to betting.

The DSA does not define what is illegal and what to ban. However, since its introduction, all online intermediaries are required to be more transparent and accountable, so any hints of potential cheating will be exposed. You are also more empowered to enforce users’ rights, and if you are unfair to your audience in terms of keeping your fee, advertising obligations, setting up targeting mechanisms, etc. the European Commission is more likely to side with the offended user. 

This coincides very well with the trend for white-hat approaches and promotional techniques that can be seen throughout the industry in the latest years. Therefore, the conclusion today will be simple — as long as you act within the law and are honest with your audience, you will not face any consequences and critical cuts in ROI. Study all the provisions of the DSA that apply to you and sleep well 🙂

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