DSA: MEPs near agreement on targeted ads, recommender system, marketplace liability

The European Parliament is the last co-legislator that has to adopt a position on the Digital Services Act (DSA). [Bernhard Richter/Shutterstock]

The main political groups of the European Parliament could soon agree on key points of the proposal to regulate online services, according to the latest compromise amendments seen by EURACTIV. Still, discussions may not meet the December deadline.

The compromise amendments to the Digital Services Act (DSA) will be discussed on Tuesday (23 November) in the context of a meeting between the leading MEP Christel Schaldemose and her counterparts from the other political groups.

Schaldemose has failed so far to secure a majority in the European Parliament for her proposals to modify the EU landmark legislation. In particular, the Danish lawmaker has been pushing for the liability of online marketplaces for third-country retailers, a ban on targeted advertising, and turning off platforms’ recommender systems by default.

Disagreements with other political groups, notably the liberals and Christian-democrats, meant that DSA is delayed compared to its sister proposal, the Digital Markets Act (DMA), which is set to be adopted by the EU Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) on Tuesday.

However, the latest compromise amendments show points of contention between political groups are being smoothed out.

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The EU lawmaker responsible for the Digital Services Act (DSA) deems the landmark legislation will provide a “democratic rulebook for online platforms”, and indicates consumer protection and product safety as the red line for future negotiations.

Targeted ads

The compromise entails dropping the total ban of targeted advertising, a flagship proposal of the Tracking Free Ads, a cross-party coalition of which Schaldemose is a member. The text mirrors the compromise found in the DMA, which includes a total ban for commercial purposes only for minors.

How platforms determine the age of users is also an object of discussion, with some MEPs pushing for a specification of ‘known’ minors. The adjective ‘known’ was eventually dropped as it did not provide legal clarity.

MEP Schaldemose is to include provisions obliging platforms to assess the age of their users based on the data that they collect, a European Parliament official told EURACTIV. However, these obligations are not in the latest compromises.

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The revised text under Article 24 also reiterates the need to request users’ consent to process personal data for targeted advertising as foreseen under the GDPR, the EU privacy law, once again echoing similar measures included in the DMA.

Moreover, “online platforms shall ensure that refusing consent shall be no more difficult or time-consuming to the recipient than giving consent,” the text reads.

Recommender system

Schaldemose wanted to turn off online platforms’ recommender systems by default. As a result, social media like Facebook or Instagram would not personalise the user experience based on individual preferences unless people opted into that option.

While the proposal did not fly, Article 29 was revised to commend very large online platforms to provide at least one option that is not based on profiling. In addition, users should be able “to select and to modify at any time their preferred option for each of the recommender systems that determines the relative order of information presented to them.”

Furthermore, all online platforms will need to make their algorithm’s ‘main parameters’ to rank content and personalise the user experience easily accessible. That includes, as a minimum, the list of criteria used to assess content relevance, the objective of the optimisation, how the system interacts with user behaviour, and the relative weight of each parameter.

Marketplace liability

Another flagship proposal for the rapporteur is the liability of online marketplaces, which include e-commerce websites where multiple parties can exchange services and products.

Schaldemose has been arguing to make online marketplaces liable for a vendor based in a third country that cannot be reached by legal action under the traceability provisions of Article 22.

The measures were criticised for being disproportionate, particularly towards smaller platforms with fewer resources to ensure compliance. Micro and small enterprises enjoy general liability exemptions under Article 16, which, however, carves out an exception for Article 22.

The latest compromise introduces a waiver system for these smaller actors that would be able to request a total or partial exemption to the European Commission. The EU executive would have to define this process via delegated acts, consulting with the relevant national authorities.

Additionally, the new text suggests that users might be able to sue platforms directly based on the DSA, as they would have the right to seek “compensation from providers of intermediary services, against any direct damage or loss suffered due to an infringement by providers of intermediaries services of obligations established under this Regulation.”

Potential new delays

The DSA will be voted on at the IMCO on 9 December. Nonetheless, a second European Parliament official told EURACTIV that the timeline might not be realistic as the discussion on recitals had barely begun. Many key points of the negotiations had been postponed to the recitals, the official stressed, which means they need to be thoroughly discussed and agreed upon.

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[Edited by Alice Taylor]

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