European Commission Updating 20-Year-Old Digital Services Act, Impacting Cloud and Hosting Providers, TLD Registries and Registrars

As part of the European Digital Strategy, the European Commission announced in June a Digital Services Act package to strengthen the Single Market for digital services and foster innovation and competitiveness of the European online environment. The revised package will “impact network operators, cloud and hosting providers, top-level domain registries and registrars”, among others.

The Digital Services Act will be a major piece of regulation that will affect online service providers across the Internet landscape and, ultimately, the Internet itself and its billions of users, a point made in a joint news release from RIPE NCC and CENTR.

As the European Commission explains, the legal framework for digital services has been unchanged since the adoption of the e-Commerce Directive in the year 2000. Ever since, this Directive has been the foundational cornerstone for regulating digital services in the European Union.

To understand the full impact, the European Commission held an open consultation on the Digital Services Act that concluded on 8 September in order to collect feedback from a wide range of Internet stakeholders.

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“The Digital Services Act is essentially an update to the E-Commerce Directive of 2000, which provides the legal framework regulating digital services in the EU and sets out the liability regime for ‘information society service’ providers,” said RIPE and CENTR in their joint news release. “It will include rules about who will be responsible for taking down illegal and possibly ‘harmful’ content, and will impact network operators, cloud and hosting providers, top-level domain registries and registrars and many of the other operators who maintain the underlying infrastructure upon which the Internet is built.”

Both the RIPE NCC and CENTR responded to the European Commission’s open consultation by urging policymakers to make a distinction between the Internet’s core infrastructure and operations, and the many applications and content that run on top of that infrastructure, in order to protect the core infrastructure from unnecessary and disproportionate intervention.

“Our goal is to ensure that well-intentioned policies to protect users don’t unintentionally disrupt the Internet’s technical operations,” said Marco Hogewoning, External Relations Manager for Public Policy & Internet Governance at the RIPE NCC. “Besides the potential for notice-and-takedowns to be abused by bad actors, any intervention at the level of naming and addressing will almost certainly result in collateral damage. So, we need to make sure that actions taken that affect the core of the Internet are only used under very strict and limited conditions and that there are protections against any malicious behaviour.”

Both the RIPE NCC and CENTR encourage the European Commission to include the technical community in developing clear definitions around the scope of the new legal framework, drafting guidelines around how different types of operators and service providers should respond to takedown requests, and developing a comprehensive understanding of how different operators and layers of the Internet will be affected by the new regulation.

“Country code top-level domain registries maintain a crucial building block of the Internet infrastructure, the Domain Name System, which is essential to the provision of e-commerce, e-government and other online services.” said Polina Malaja, Policy Advisor at CENTR. “The primary aim of the Digital Services Act is to tackle the dissemination of illegal content as effectively as possible. Since the Internet infrastructure layer has no effective control over content online, any revision of the current intermediary liability framework as established in the e-Commerce Directive needs to carefully assess whether extending content moderation obligations to the Internet infrastructure layer will really achieve this aim.”

Explaining the rationale for the changes, the European Commission explains:

the online world and the daily use of digital means are changing every day. Over the last 20 years, many new ways to communicate, shop or access information online have been developed, and those ways are constantly evolving. Online platforms have brought significant benefits for consumers and innovation, as well as  wide-ranging efficiencies in the European Union’s internal market. These online platforms facilitate cross-border trading within and outside the Union and open entirely new business opportunities to a variety of European businesses and traders by facilitating their expansion and access to new markets.

Although new services, technologies and business models have brought many opportunities in the daily life of European citizens, they have also created new risks to citizens and society at large, exposing them to a new range of illegal goods, activities or content.

Furthermore, many online businesses have struggled with systematic problems familiar to the platform economy regarding contestability, fairness and the possibility of market entry. Large online platforms are able to control increasingly important platform ecosystems in the digital economy. Typically, they feature an ability to connect many businesses with many consumers through their services that, in turn, allows them to leverage their advantages, such as their access to large amounts of data, from one area of their activity to improve or develop new services in adjacent markets.

The European Single Market therefore requires a modern legal framework to ensure the safety of users online and to allow innovative digital businesses to grow, while respecting the basic principles underpinning the current legal framework of the e-Commerce Directive.

And what is in the Digital Services Act package? The European Commission explains:

The new Digital Services Act package should modernise the current legal framework for digital services by means of two main pillars:

First, the Commission would propose clear rules framing the responsibilities of digital services to address the risks faced by their users and to protect their rights. The legal obligations would ensure a modern system of cooperation for the supervision of platforms and guarantee effective enforcement.

Second, the Digital Services Act package would propose ex ante rules covering large online platforms acting as gatekeepers, which now set the rules of the game for their users and their competitors. The initiative should ensure that those platforms behave fairly and can be challenged by new entrants and existing competitors, so that consumers have the widest choice and the Single Market remains competitive and open to innovations.

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