On February 17, 2024, the European Union’s Digital Services Act—a law created for safer digital spaces where users’ fundamental rights are protected and businesses can gain a level playing field—went into effect. Organizations impacted by the Digital Services Act include all online platforms, including marketplaces, social networks, content-sharing platforms, app stores, online travel and accommodation platforms, cloud services, domain name systems, and internet service providers operating in the European Union (EU).
The Digital Services Act mandates content moderation to prevent and remove illegal content and ensure user safety. It also imposes rigorous transparency and reporting, requiring companies to disclose their moderation practices and compliance measures.
Business Impact and Global Implications
These new regulations may pose significant challenges for companies operating within the EU or targeting EU residents, challenges that demand these organizations take on operational and technological modernizations.
The Digital Services Act’s content moderation, transparency, and reporting requirements demand a balance between upholding freedom of speech and adhering to regulatory standards. Companies that fail to strike this balance risk financial penalties and, potentially, a loss of user trust and damage to their brand reputation. Because this law applies to any company doing business in the EU, the act’s global reach means that organizations must reassess their strategies and operations worldwide to ensure compliance, adding to the complexity and cost of doing business.
Technology Solutions Helping Organizations Comply
To navigate the obstacles the Digital Services Act poses, companies must adopt a proactive approach to digital modernization and embrace adaptability in the face of ongoing digital evolution. The following are technologies that make embracing the law possible:
- Content moderation and management
- Automated filtering tools: Use AI and machine learning algorithms to detect and remove illegal content, hate speech, or disinformation
- User reporting systems: Platforms for users to report illegal or harmful content
- Content review systems: Tools for human moderators to review and make decisions on flagged content efficiently
- Transparency and reporting
- Analytics and reporting tools: Systems that generate detailed reports on content moderation practices, ad targeting methods, and algorithms used for content curation
- Data visualization tools: To help present complex data in an easily understandable format for transparency reports
- Compliance management systems: Software to track and document compliance efforts with the Digital Services Act requirements
- Advertising and algorithm transparency
- Ad transparency tools: Solutions to disclose information about advertisers and targeting criteria to users
- Algorithm auditing tools: Systems to regularly audit and report on the functioning and impact of algorithms used for content curation and recommendations
- Governance, risk assessment, and audit
- Risk management software: Tools to identify, assess, and mitigate risks related to content dissemination and data privacy
- Automated compliance checks: Systems that continually monitor and flag potential Digital Services Act compliance issues
- Data privacy
- Data privacy management tools: Solutions to ensure user data is collected, stored, and processed in compliance with privacy regulations.
- Anonymization and data encryption tools: Technologies to anonymize and encrypt user data to protect privacy
- Consumer protection and dispute resolution
- Automated dispute resolution systems: Tools to handle complaints and disputes between users and the platform efficiently
- Feedback and review systems: Platforms for users to provide feedback on content moderation decisions
- Accessibility and inclusivity
- Accessibility testing tools: Software to ensure digital services are accessible to all users, including those with disabilities
- Inclusive design frameworks: Guidelines and tools for creating content and interfaces that are inclusive and cater to a diverse user base
U.S. Comparison
In contrast to the EU’s Digital Services Act, the United States currently has a fragmented approach to digital regulation, primarily managed at the state level with no federal counterpart. This patchwork of laws creates a complex environment for companies that operate across different jurisdictions, often leading to a challenging compliance landscape. States like California, Virginia, and Colorado have their own data privacy laws. California, for instance, has the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA), while Virginia has the Consumer Data Protection Act (VCDPA), and Colorado has the Colorado Privacy Act (CPA).
