The Commission’s proposal for a Digital Services Act (DSA) would create new transparency and accountability rules for online services to counter illegal content. The regulation would continue the principle enshrined in the e-Commerce Directive that online services are subject to the law of the member state of their main establishment—the so-called “country of origin principle.” However, some member states, led by France, have proposed to change the principle with the member states where they offer their products and services—the so-called “country of destination principle.” The shift would have a dramatic legal and economic impact on businesses because they would have to comply with 27 member states rather than one. In this context, the Center for Data Innovation hosted a panel discussion with representatives from the Commission and experts from the private sector to discuss the Commission’s enforcement framework and how the European Parliament should improve it.
The discussion started with a presentation of the Commission’s proposed enforcement framework by Enrico Camilli, policy officer and lawyer at the European Commission. Mr. Camilli explained that the DSA is generally applicable to all online services. The Commission designed the regulation to examine the processes, rather than the content, of online services in a centralized manner. For this reason, the member state where the online service has its main establishment would enforce the regulation. This member state would have to create an independent authority that would coordinate with the Commission and other member states to ensure consistency. The Commission would only have a supplementary role, when needed, depending on the nature of the case and for very large online services. Manon Tabaczynsky, senior policy officer at Allied for Startups, and Vinous Ali, coordinator at Digital Future for Europe, stressed that the country of origin principle is crucial for startups to ensure legal clarity with minimum compliance costs to scale up across borders.
Mr. Camilli then presented how the cooperation mechanism between the Commission and member states would work. The DSA would create a standardized information-sharing system and procedure to support the competent regulator in each member state in enforcing the regulation. For instance, a Board would facilitate and recommend actions, and the Commission would intervene to resolve disputes between member states. Ms. Tabaczynsky outlined that, even with a cooperation mechanism in place, the Parliament should not change the DSA to the country of destination principle because it would create market fragmentation and high compliance costs due to the lack of a common definition of illegal content in Europe. Instead, she noted that the country of origin principle should remain and that national authorities should have proper resources to enforce the regulation effectively. Ms. Ali added that the cooperation should be smooth between regulators to avoid unnecessary delay. In addition, she underscored the need for cooperation between regulators and businesses to ensure that the latter do not remove more content than what is necessary to avoid liability.
Ms. Ali and Ms. Tabaczynsky then discussed the ongoing debate before the European Parliament. Ms. Ali highlighted that European Policymakers should clarify the definitions to guarantee effective enforcement. Ms. Tabaczynsky repeatedly urged the Parliament not to depart from the country of origin principle to avoid market fragmentation and undue burden that would harm European businesses and consumers.
The discussion closed with the importance of the DSA to preserve the digital single market with a sustainable legal framework that considers the needs of startups.
