EU's crackdown on Big Tech starts tomorrow with new rules
What's the story
The European Union's Digital Services Act (DSA) is designed to regulate major tech and social media companies, such as Google, Meta, and Amazon. The first phase of the monumental law will come into effect tomorrow (August 25). DSA impacts 19 platforms, including eight social media platforms, five online marketplaces, mobile app stores, search engines, and other digital services. Let's see what the act means for Big Tech.
Information
Platforms with over 45 million users come under DSA
DSA's goal is to ensure user safety online and prevent the spread of harmful content. Platforms with 45 million or more users will be subject to DSA. Non-compliance with the regulation could result in fines of up to 6% of their global revenue.
Details
The DSA makes targeted advertising very difficult
Under the DSA, companies are required to promptly and objectively remove flagged illegal content and products. Additionally, the act prohibits targeting vulnerable groups, including children, with advertisements. The new EU regulation puts a chokehold on targeted advertising, which has been a major source of revenue for social media platforms like Facebook, Instagram, and TikTok. The DSA prohibits advertisements targeting minors, while older users will have the option to turn off ads based on their activities.
What Next?
Largest platforms will need to provide insight into their algorithms
The DSA aims to provide the EU with insight into the algorithms of companies to determine if they have appropriate processes in place. The largest platforms will be required to identify and evaluate potential systemic risks and demonstrate that they are taking adequate steps to mitigate them. None of the companies have disputed their inclusion in the list, but Amazon has filed a lawsuit against its addition, arguing that it is being treated unfairly.
Insights
Social media platforms are offering chronological feeds
DSA also puts restrictions on algorithm-generated content on social media platforms. Facebook and Instagram users in Europe can now see Reels and Stories from people they follow in chronological order. TikTok has also provided users an option to disable the platform's content-selection algorithm. Additionally, the search results for Facebook and Instagram users will be solely dependent on the keywords entered. Google and Apple's app stores as well as Google Search and Microsoft Bing also come under the new rule.