Digital Services Act
In December 2020, The European Commission proposed a legislative initiative, the Digital Services Act (DSA), to strengthen the single market and protect citizens and their rights. The DSA aims to set standard rules on obligations and accountability on intermediaries and across the single market.
Following the ordinary legislative procedure, the European Parliament and the Member States are currently discussing this regulation proposal. Once the procedure is done and the file is adopted, the rules will be directly applicable across the EU.
At the European Parliament, the file is being discussed in four associated committees: IMCO (Internal Market and Consumer Protection), LIBE (Civil Liberties, Justice and Home Affairs), JURI (Legal Affairs) and ITRE (Industry, Research and Energy). The leading Committee is IMCO, and the voting on all the committees’ tabled amendments will happen on 8 November 2021.
Regarding the proposal’s content, further transparency obligations were the only provisions by the original European Commission’s proposal for the online advertising industry. Still, the file is being leveraged at the European Parliament to introduce a ban on “targeted advertising“, which is not defined and could be construed broadly.
IAB Europe, the European-level association for digital advertising & marketing ecosystem, released its position paper on the file in March 2021. While waiting on the November voting, IAB Europe published its reaction to the IMCO and LIBE draft reports. Moreover, the Industry Players And Major Industry Associations joining forces posted an Open Letter to oppose a ban on targeted ads & recognise the value of the EU’s existing data protection framework.
From the outset, IAB Europe has approached the DSA with an open mind. We have taken good note of the importance attached by the European Commission to ensure a sufficient level of transparency in digital advertising. This view aligns with our own, given the industry’s self-interest in ensuring transparency and trust across the value chain.
But we also believe that a discussion on what new transparency requirements are required in the DSA must be fact-based, particularly if restrictions on certain practices are contemplated. Data-driven advertising is comprehensively covered by the existing EU privacy & data protection legal framework, and any new provisions must not undermine or contradict that framework or its enforcement. Surely this should be as important for regulators as for the companies invested in GDPR and ePrivacy legal compliance, including implementing the IAB Europe Transparency & Consent Framework (TCF).
In line with the critical transparency and accountability requirements under the GDPR, we believe that empowering the user should pave the way to support the sustainability of the “open web”. The EP’s proposed a ban on targeted advertising would effectively deprive all European citizens of a significant proportion of the content and services they benefit from today. Moreover, such measures would undercut market entry opportunities for start-ups and SMEs in need to reach their customers, create brand awareness and scale, especially at a time when economic recovery is key.
While we see the discussions’ progress at the EU institutions, we call on EU policymakers and legislators to ensure law-making grounded in studious care and attention, and we remain committed to continuing our critical conversations on the DSA dossier. It should be our joint priority to ensure that digital advertising can continue to support pluralistic media and Europeans’ access to the free and open internet dependent on ad-supported content.
Q: What is the DSA Regulation?
A: The DSA puts in place responsibilities on different types of services, including intermediary services, hosting services, online platform services, and very large online platforms services. These harmonised EU-wide obligations aim to strengthen the digital internal market, clarify responsibilities regarding digital services, and ensure transparency, accountability, and regulatory oversight of the EU online space.
According to the European Commission, online intermediary services are the digital services that transmit or store the content of third parties. They would, for example, include internet service providers, cloud services, messaging, marketplaces, or social networks.
Q: How will the DSA affect the ad ecosystem?
A: The DSA aims to ensure a sufficient level of transparency in digital advertising; this reflects the importance of organising the digital advertising operations and partnerships using their technology infrastructure diligently. A comprehensive understanding of media buying and ad transitioning will aid compliance with the EU liability regime.
The rules laid down in the DSA proposal ‘complement but do not amend existing rules on consent and the right to object to the processing of personal data’. While this premise does not modify the existing consent paradigm, the outcome of the ordinary legislative procedure could be including more premises that could undermine the already existing regulatory framework, such as the GDPR and the ePrivacy directive.
Q: When will this become law? How does the law-making process work?
A: Following the publication of the European Commission’s proposal in December 2020, an agreement must now be found between Members of the European Parliament and Member States’ governments in the Council of the European Union, who can make changes to the proposed text.
This procedure is known as the Ordinary Legislative Procedure. The two legislators will most likely reach a compromise in the so-called trilogue negotiations. These negotiations happen between representatives of the Council and the Parliament with input from the Commission. The file is expected to enter into Trilogues at the beginning of 2022.
Q: What’s a trilogue negotiation?
A: Trilogue negotiations occur after the Parliament and the Council have prepared their initial positions. Due to time limits which apply only later during the ordinary legislative procedure, the co-legislators usually seek to come to an informal agreement before the Parliament and the Council formally vote on a proposal for the first time. After the Parliament and the Council vote on a draft law for the first time, strict time limits will apply for the second and third rounds of votes.
The representatives of the Parliament and Council usually meet informally with Commission’s representatives to agree before this part of the process.
Q: Who gets to have a say during the legislative process?
A: The European Commission released the Digital Services Act (DSA) in December 2020. After this, the European Parliament reacted by voting on three resolutions from Alex Agius Saliba (S&D), Tiemo Wölken (S&D) and Kris Peeters (EPP) in October 2020 related to tackling current shortcomings in the online environment.
At the moment, the European Parliament is discussing the file in four associated committees: IMCO (Internal Market and Consumer Protection), LIBE (Civil Liberties, Justice and Home Affairs), JURI (Legal Affairs) and ITRE (Industry, Research and Energy). The rapporteur for LIBE is Patrick Breyer (Greens/EFA), the rapporteur for JURI is Geoffroy Didier (EPP) and the rapporteur for ITRE is Henna Virkkunen (EPP). The IMCO committee was appointed as the leading committee and MEP Christel Schaldemose (S&D Denmark) as rapporteur in January 2021. The four associated Committees work under their competences on the file; all their amendments will be put to the vote in November 2021 at the IMCO committee. The Parliament’s mandate to enter into trilogues will be adopted during the plenary session in December 2021 to allow associated committees to re-table amendments.
Meanwhile, discussions to find a common position on the DSA have also started in Council.
Q: When can we expect the co-legislators to reach a compromise? Are there any deadlines that have to be met?
A: The debate on this draft law began in 2020, and the final draft report coming from one of the associated EP committees, LIBE, was released in July 2021. The voting of all the committees’ tabled amendments will happen on 8 November 2021. The Plenary vote is expected to happen in December 2021. The trilogues are scheduled to begin at the start of 2022.
After the expected Trilogues dates, there are no official deadlines to be met. Once an informal agreement has been reached, it still takes time for the law to be drawn up in each language and for the co-legislators to vote on it formally. Moreover, the legislation could take more time to enter into force and to be applicable in each Member State if they need preparation to comply with the new rules.