To Combat Illegal Content, The EU Has Set New Online Rules For Google And Meta

After more than 16 hours of negotiations, an agreement was reached. The Digital Services Act (DSA) is the second component of EU antitrust chief Margrethe Vestager's strategy to rein in Alphabet's (NASDAQ:GOOGL) subsidiary Google, Meta, and other US technology giants.

Last month, she won support from the EU's 27 member countries and lawmakers for ground-breaking rules known as the Digital Markets Act (DMA), which could force Google, Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Meta, and Microsoft (NASDAQ:MSFT) to alter their core business practices in Europe.

"We have reached an agreement on the DSA: The Digital Services Act will ensure that what is illegal offline is also illegal online - not as a slogan, but as reality," Vestager wrote in a tweet.

Dita Charanzova, an EU lawmaker who first advocated for such rules eight years ago, applauded the agreement.

"Google, Meta, and other large online platforms will need to take action to improve user protection. Europe has made it abundantly clear that they cannot function as autonomous digital islands "In a statement, she stated.

Google stated in a statement: "Details will matter as the law is finalized and implemented. We look forward to collaborating with policymakers to iron out the remaining technical details of the law to ensure it works for everyone."

Under the DSA, companies that violate the rules face fines of up to 6% of their global revenue, and repeated violations may result in their exclusion from doing business in the EU.

The new rules prohibit advertising directed at children or based on sensitive personal information such as religion, gender, race, or political beliefs. Dark patterns, which are deceptive tactics used to trick people into providing personal information to businesses online, will also be prohibited.

During a crisis, very large online platforms and search engines will be required to take specific measures. The move was precipitated by Russia's invasion of Ukraine and the subsequent dissemination of disinformation.

Companies may be compelled to provide regulators and researchers with data relating to their algorithms.

Additionally, the companies must pay a yearly fee of up to 0.05 percent of their global annual revenue to cover the costs of compliance monitoring.

Martin Schirdewan, an EU lawmaker, criticized the exemption granted to medium-sized businesses.

"Under conservative pressure, an exception rule for medium-sized businesses was incorporated; this is a mistake. Due to the large number of businesses in the digital sector that fall under this definition, the exception acts as a loophole "'He stated.

The DSA is scheduled to take effect in 2024.