1.CONTEXT OF THE PROPOSAL
•Reasons for and objectives of the proposal
Since the adoption of Directive 2000/31/EC 1 (the “e-Commerce Directive”), new and innovative information society (digital) services have emerged, changing the daily lives of Union citizens and shaping and transforming how they communicate, connect, consume and do business. Those services have contributed deeply to societal and economic transformations in the Union and across the world. At the same time, the use of those services has also become the source of new risks and challenges, both for society as a whole and individuals using such services. Digital services can support achieving Sustainable Development Goals by contributing to economic, social and environmental sustainability. The coronavirus crisis has shown the importance of digital technologies in all aspects of modern life. It has clearly shown the dependency of our economy and society on digital services and highlighted both the benefits and the risks stemming from the current framework for the functioning of digital services.
In the Communication ‘Shaping Europe’s Digital Future’ 2 , the Commission committed to update the horizontal rules that define the responsibilities and obligations of providers of digital services, and online platforms in particular.
In doing so, the Commission has taken account of the issues identified in the European Parliament’s own initiative reports and analysed the proposals therein. The European Parliament adopted two resolutions on the basis of Article 225 of the Treaty on the Functioning of the European Union (TFEU) on the ‘Digital Services Act – Improving the functioning of the Single Market’ 3 and on the ‘Digital Services Act: adapting commercial and civil law rules for commercial entities operating online’ 4 . The European Parliament also adopted a resolution under the non-legislative procedure on the ‘Digital Services Act and fundamental rights issues posed’ 5 . In substance, the resolutions are complementary in many aspects. They include a strong call for maintaining the core principles of the e-Commerce Directive and for protecting fundamental rights in the online environment, as well as online anonymity wherever technically possible. They call for transparency, information obligations and accountability for digital services providers and advocate for effective obligations to tackle illegal content online. They also advocate for public oversight at EU and national level, and cooperation between competent authorities across jurisdictions in enforcing the law, especially when addressing cross-border matters.
The resolution on ‘Digital Services Act – Improving the functioning of the Single Market’ calls for an ambitious reform of the existing EU e-commerce legal framework while maintaining the core principles of its liability regime, the prohibition of general monitoring and the internal market clause, which it considers to be still valid today. Confirming the objectives of the e-Commerce Directive, the resolution calls for measures which have consumer protection at their core, by including a detailed section on online marketplaces, and which ensure consumer trust in the digital economy, while respecting users’ fundamental rights. The resolution also advocates for rules to underpin a competitive digital environment in Europe, and envisages the Digital Services Act as a standard-setter at global level.
The resolution on ‘Digital Services Act: adapting commercial and civil law rules for commercial entities operating online’ calls for more fairness, transparency and accountability for digital services’ content moderation processes, ensuring that fundamental rights are respected, and guaranteeing independent recourse to judicial redress. The resolution also includes the request for a detailed ‘notice-and-action’ mechanism addressing illegal content, comprehensive rules about online advertising, including targeted advertising, and enabling the development and use of smart contracts.
The non-legislative resolution on the ‘Digital Services Act and fundamental rights issues posed’ highlights the need for legal clarity for platforms and users, and respect for fundamental rights given the rapid development of technology. It calls for harmonised rules for addressing illegal content online and for liability exemptions and content moderation. The resolution also includes clear reporting and transparency responsibilities for platforms and authorities.The Council’s Conclusions 6 also welcomed the Commission’s announcement of a Digital Services Act, emphasising ‘the need for clear and harmonised evidence-based rules on responsibilities and accountability for digital services that would guarantee internet intermediaries an appropriate level of legal certainty’, and stressing ‘the need to enhance European capabilities and the cooperation of national authorities, preserving and reinforcing the fundamental principles of the Single Market and the need to enhance citizens’ safety and to protect their rights in the digital sphere across the Single Market’. This call for action was reiterated in the Council’s Conclusions of 2 October 2020 7 .
Building on the key principles set out in the e-Commerce Directive, which remain valid today, this proposal seeks to ensure the best conditions for the provision of innovative digital services in the internal market, to contribute to online safety and the protection of fundamental rights, and to set a robust and durable governance structure for the effective supervision of providers of intermediary services.
The proposal defines clear responsibilities and accountability for providers of intermediary services, and in particular online platforms, such as social media and marketplaces. By setting out clear due-diligence obligations for certain intermediary services, including notice-and-action procedures for illegal content and the possibility to challenge the platforms’ content moderation decisions, the proposal seeks to improve users’ safety online across the entire Union and improve the protection of their fundamental rights. Furthermore, an obligation for certain online platforms to receive, store and partially verify and publish information on traders using their services will ensure a safer and more transparent online environment for consumers. Recognising the particular impact of very large online platforms on our economy and society, the proposal sets a higher standard of transparency and accountability on how the providers of such platforms moderate content, on advertising and on algorithmic processes. It sets obligations to assess the risks their systems pose to develop appropriate risk management tools to protect the integrity of their services against the use of manipulative techniques. The operational threshold for service providers in scope of these obligations includes those online platforms with a significant reach in the Union, currently estimated to be amounting to more than 45 million recipients of the service. This threshold is proportionate to the risks brought by the reach of the platforms in the Union; where the Union’s population changes by a certain percentage, the Commission will adjust the number of recipients considered for the threshold, so that it consistently corresponds to 10 % of the Union’s population. Additionally, the Digital Services Act will set out a co-regulatory backstop, including building on existing voluntary initiatives.
The proposal maintains the liability rules for providers of intermediary services set out in the e-Commerce Directive – by now established as a foundation of the digital economy and instrumental to the protection of fundamental rights online. Those rules have been interpreted by the Court of Justice of the European Union, thus providing valuable clarifications and guidance. Nevertheless, to ensure an effective harmonisation across the Union and avoid legal fragmentation, it is necessary to include those rules in a Regulation. It is also appropriate to clarify some aspects of those rules to eliminate existing disincentives towards voluntary own-investigations undertaken by providers of intermediary services to ensure their users’ safety and to clarify their role from the perspective of consumers in certain circumstances. Those clarifications should help smaller, innovative providers scale up and grow by benefitting from greater legal certainty.
A deeper, borderless single market for digital services requires enhanced cooperation among Member States to guarantee effective oversight and enforcement of the new rules set out in the proposed Regulation. The proposal sets clear responsibilities for the Member State supervising the compliance of service providers established in its territory with the obligations set by the proposed Regulation. This ensures the swiftest and most effective enforcement of rules and protects all EU citizens. It aims at providing the simple and clear processes for both citizens and service providers to find relief in their interactions with supervising authorities. Where systemic risks emerge across the Union, the proposed Regulation provides for supervision and enforcement at Union level.
•Consistency with existing policy provisions in the policy area
The current EU legal framework regulating digital services is underpinned, first and foremost, by the e-Commerce Directive. This proposed Regulation is without prejudice to the e-Commerce Directive, and builds on the provisions laid down therein, notably on the internal market principle set out in Article 3. The proposed Regulation provides for a cooperation and coordination mechanism for the supervision of the obligations it imposes. With regard to the horizontal framework of the liability exemption for providers of intermediary services, this Regulation deletes Articles 12-15 in the e-Commerce Directive and reproduces them in the Regulation, maintaining the liability exemptions of such providers, as interpreted by the Court of Justice of the European Union.
Depending on the legal system of each Member State and the field of law at issue, national judicial or administrative authorities may order providers of intermediary services to act against certain specific items of illegal content. Such orders, in particular where they require the provider to prevent that illegal content reappears, must be issued in compliance with Union law, in particular with the prohibition of general monitoring obligations, as interpreted by the Court of Justice of the European Union 8 . This proposal, in particular its Article 8, leaves this case-law unaffected. This proposal should constitute the appropriate basis for the development of robust technologies to prevent the reappearance of illegal information, accompanied with the highest safeguards to avoid that lawful content is taken down erroneously; such tools could be developed on the basis of voluntary agreements between all parties concerned and should be encouraged by Member States; it is in the interest of all parties involved in the provision of intermediary services to adopt and implement such procedures; the provisions of this Regulation relating to liability should not preclude the development and effective operation, by the different interested parties, of technical systems of protection and identification and of automated recognition made possible by digital technology within the limits laid down by Regulation 2016/679.
•Consistency with other Union policies
The proposed Regulation introduces a horizontal framework for all categories of content, products, services and activities on intermediary services. The illegal nature of such content, products or services is not defined in this Regulation but results from Union law or from national law in accordance with Union law.