The Digital Services Act: what it will mean for travel companies

The Digital Services Act (DSA) is another piece of legislation currently under debate at the EU level. It is one of two pieces of proposed legislation released in December 2020, the other being the Digital Markets Act (DMA), which together aim ‘to create a safer digital space where the fundamental rights of users are protected and [which] establish a level playing field for businesses’.

The EU’s original ambitious plan was to have the text of the legislation agreed between the various EU institutions during 2022. That plan has now been pushed to the right – by how much we wait to see – but 2022 will see more detail and debate on digital service providers coming through.

What is the DSA?

While the DMA is aimed at online platforms of a certain (large) size who are seen as ‘gatekeepers’ between users and customers, the DSA will catch a broader range of online businesses, including many in the travel industry.

It will impact businesses that use online platforms to make sales into the EU or are themselves an online intermediary connecting businesses and customers. It will apply to businesses which either have an establishment in the EU, a significant number of users in one or more Member States, or which target activities towards one or more Member States.

The DSA is designed to be a common set of rules and obligations across the single market for the providers of online intermediary services. The obligations of these online businesses will be proportionate to their role, size and impact on the online ecosystem so medium and small businesses will not be subject to the same compliance regime as the ‘big tech’ companies.

Main points for travel companies

A lot of the detail seen so far is aimed at improving content moderation and reducing the opportunity for harmful content to be displayed online, much of which will be less relevant to businesses selling travel products and packages. However, the following areas will be relevant:

• Large platforms’ terms and conditions often determine how a business’ content is ranked and advertised. In addition, businesses often don’t have access to data which relates to their consumers with whom they contract/are in contact via the platform. Online intermediaries will now be subject to an obligation to include in their terms and conditions information on any restrictions on the use of data provided by the users of the platform, including reference to how content is moderated, how algorithms make decisions and how humans review content.  This may not give access to the data itself, but businesses will be more aware of what will be made available to them.

• Online marketplaces will need to adopt a “know your business customer” (KYBC) approach, to help identify sellers of illegal goods and services. There will be an obligation for certain online platforms to receive, store and partially verify and publish information on the traders using their services.

• In respect of online adverts, there will be new transparency obligations. For each advert and to each user, the online platform must provide, in real time, clear and unambiguous information to users that they are seeing an advertisement, on whose behalf the advert is displayed, and provide meaningful information about the main parameters used to determine why a specific user is targeted i.e. whether or not the advert is based on profiling. Also, when platforms recommend content, users will be able to modify the criteria used and choose not to receive personalised recommendations. Users should also see if content is sponsored.

• There will be large fines for non-compliance – up to 6% of the annual income or turnover of the intermediary service provider along with periodic penalty payments for continuous infringements of up to 5% of the average daily turnover of the intermediary in the preceding financial year per day.

• Non-EU based online intermediaries will need to designate a legal representative in the EU who will be required to cooperate with supervisory authorities and can be held liable for non-compliance with the DSA.

What next?

As mentioned above, the DSA and DMA are still going through the motions within the various EU institutions. Once enacted, they will take the form of Regulations, and so will be directly applicable to all Member States.

The DSA and DMA will not, of course, be directly applicable in the UK. The UK does not want to fall behind however, so the UK’s Digital Task Force is simultaneously considering the design and implementation of a new pro-competition regime for digital markets in the UK. We will report on this separately and what it could mean for the travel industry.