EXPLAINER: How sweeping EU rules would hold back tech companies

LONDON — Online companies are expected to step up efforts to keep harmful content off their platforms and take other steps to protect users under rules European Union lawmakers approved on Thursday.

The 27-nation bloc has earned a reputation as a pioneer in the growing global push to rein in big tech companies facing withering criticism over misinformation, hate speech and other harmful content on their platforms.

Here’s an overview of the draft EU rules, known as the Digital Services Act, and why they would have an impact:

WHAT IS THE DIGITAL SERVICES ACT?

The legislation is part of a sweeping overhaul of European Union digital rules aimed at ensuring online companies, including tech giants like Google and Facebook parent company Meta, protect users on their platforms and treat their rivals fairly. It is an update of the two-decade-old EU e-commerce directive.

“The Digital Services Act could now become the new benchmark for digital regulation, not just in Europe but around the world,” the bill’s lead EU legislator, Christel Schaldemose, said in a debate on Wednesday. . “Big tech nations like the US or China are watching closely to see what we will now agree on.”

The proposals represent half of the flagship digital regulations drafted by the bloc. EU lawmakers are also working on the Digital Markets Act, which aims to limit the power of the biggest online “gatekeepers”. Both will face further negotiations with EU member countries before coming into force.

The passage of the Digital Services Act by the European Parliament is “a huge step in addressing the social problems caused by online platforms”, said Zach Meyers, senior researcher at the Center for European Reform think tank.

Similar efforts are underway in the United States, but there are deep divisions between Republicans who criticize platforms for censoring their views and Democrats who criticize them for failing to act.

“If EU member states reach an agreement with Parliament in the coming months, the EU will show how other democracies can reconcile these different political interests,” Meyers said.

WHAT DOES IT COVER?

The Digital Services Act includes a set of measures to better protect Internet users and their “fundamental rights online”. Tech companies would be held more accountable for the content of their platforms, with obligations to strengthen the reporting and removal of illegal content like hate speech or questionable goods and services sold online like counterfeit sneakers or dangerous toys.

To address concerns that takedown notices could infringe on freedom of expression, lawmakers have added safeguards to ensure they are treated in a “non-arbitrary and non-discriminatory manner”, the European Parliament has said.

Online platforms should be more transparent about their algorithms recommending the next video to watch, product to buy, or news at the top of people’s social media feeds. So-called recommendation systems have been criticized for leading people to increasingly extreme or polarizing content.

The biggest platforms should offer users at least an option for non-profiling based recommendations.

There are also measures to prohibit platforms from using “dark patterns” – deceptive techniques to trick users into doing things they did not intend to do – as well as requiring that Pornographic sites record the identity of users who upload material.

ARE THERE ANY CONTROVERSIAL POINTS?

One of the biggest legislative battles involved surveillance-based advertising, also known as targeted or behavioral advertising. Such advertisements would be prohibited to children but not prohibited outright. A total ban had been met with fierce resistance from the digital advertising industry dominated by Google and Meta.

Lawmakers instead added measures prohibiting the use of sensitive personal data to target vulnerable groups and making it just as easy to give or refuse consent to tracking.

Google did not respond to a request for comment. Meta has directed inquiries to technology lobby groups.

Monitoring ads track online behavior, such as websites visited or products purchased online by a user, to serve them more interest-based digital ads.

Groups like Amnesty International claim that ad tracking undermines the rights the legislation is meant to protect because it involves a massive invasion of privacy and indiscriminate data collection as part of a system that manipulates users and encourages ad fraud.

WHAT HAPPENS TO OFFENDERS?

EU Single Market Commissioner Thierry Breton took to Twitter on Wednesday to tout the proposed rules as the start of a new era for tough online enforcement.

“It’s time to put some order in the digital ‘Wild West’,” he said. “A new sheriff is in town – and it’s called #DSA,” he said, posting a mashup of music videos from a Clint Eastwood Spaghetti Western.

Under the Digital Services Act, violations could be punished with hefty fines of up to 6% of a company’s annual turnover.

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