Transparency is one of the key themes of the EU's Digital Services Act. Technology partner, Wendy Hederman and Associate, Caoimhe Ruane examine some of the specific new requirements contained in the Act.

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Transparency is one of the key themes of the EU’s Digital Services Act, with an important aim being to provide a transparent and safe online environment. This is reflected across a number of the Digital Services Act’s provisions.

This article focuses on the new requirements surrounding online advertising, dark patterns and recommender systems in particular.

What are the transparency requirements for online advertising under the Digital Services Act?

The Digital Services Act introduces transparency requirements for ads on online platforms so that recipients of the service can better understand why they are presented with certain ads.

Platforms must:

1. Ensure an ad is clearly marked as an advertisement
2. Provide information on whose behalf the ad is presented and who paid for the ad (if this is different to the person or entity on whose behalf the ad is for), and
3. Provide information about the main parameters used to determine the users to whom the ad is presented, and how a user can change these parameters if the platform has this functionality.

Do companies need to adhere to these requirements when promoting their own goods on online platforms?

No, an ad will only meet the definition of an advertisement under the Digital Services Act where the online platform has been paid to present the ad. So, a company’s own post on an online platform promoting its goods or services will not meet the definition of an ad under the Digital Services Act.

There are existing rules around commercial communications and transparency. These rules stem from EU laws such as the E-Commerce Directive and the Unfair Commercial Practices Directive. Traders are typically required to declare commercial communications to consumers under these laws. These overlap to some degree with the Digital Services Act, particularly regarding commercial communications. This is because there is a requirement under Article 26(2) of the Digital Services Act that online platforms must include functionality for users to declare whether the content the user provides is or contains a commercial communication.

Dark patterns: What are dark patterns and what changes in the law will the Digital Services Act bring about?

‘Dark patterns’ is a relatively new term, which covers a range of practices that many people will have encountered online. Examples are where it is difficult to cancel an online subscription, or where users are presented with false urgency messages or countdown timers. They are also sometimes referred to as deceptive design patterns. These include any practice that materially distorts or impairs the ability of users to make informed online decisions.

Article 25 of the Digital Services Act prohibits online platforms from designing, organizing or operating their online interfaces in this manner. It is the first EU law to describe these practices as ‘dark patterns’. However, some of these practices are already banned to an extent under existing EU laws such as the Unfair Commercial Practices Directive, and the GDPR. The Digital Services Act’s prohibition on dark patterns expressly does not apply to practices covered by the Unfair Commercial Practices Directive or the GDPR. The interaction between Digital Services Act, Unfair Commercial Practices Directive and GDPR is not particularly clear, however, the Digital Services Act will add another enforcement tool for tackling dark patterns.

There are instances of enforcement against dark patterns, such as recent action taken against Amazon concerning the cancellation of Prime memberships in the EU. In the UK, the Competition and Markets Authority has launched a number of high-profile investigations and initiatives regarding dark patterns. In the USA, similar moves are being taken in an attempt to regulate and reduce dark patterns.

Interestingly, there is scope for the Digital Services Act’s prohibition on dark patterns to apply in a business-to-business (B2B) context. This is because, while the Unfair Commercial Practices Directive is limited to business-to-consumer practices, the Digital Services Act will also generally apply to business recipients of the service. This means that business-to-business practices may indeed be covered.

The European Commission also has the ability under the DSA to issue guidelines on how this new restriction will apply. The European Commission’s regulatory expectations from the new restriction on dark patterns will likely become clearer if and when any relevant guidelines are published.

Recommender systems: What are recommender systems and what changes in the law will the Digital Services Act bring about?

Recommender systems are fully or partially automated systems that are used by online platforms to give prominence to certain content and information over others. These have a significant impact on the amplification of certain messages or products.

The Digital Services Act’s new requirements are being introduced to ensure transparency, and to bring more clarity and understanding to users, around the ways in which online platforms choose which information to promote by way of algorithms, including products for purchase.

It will require providers of online platforms to:

1. Provide information in plain and intelligible language on the main parameters used in the recommender systems, and
2. Provide information on any options for recipients of the service to modify and influence these main parameters

Online platforms will need to explain the criteria which are most significant in determining the information suggested to recipients of the service and the reasons for the importance of those criteria.

A key takeaway from the new rules on recommender systems is that online platforms using these systems must take action from 17 February 2024 to ensure that information on the main parameters used in their recommender systems, and any options for users to be able to modify those parameters, are included in their user-facing terms and conditions.

Conclusion

This article briefly touches on some of the transparency requirements under the Digital Services Act. There are a number of other requirements which fall under the theme of transparency, such as:

1. Transparency reporting
2. Requirements on the content of service providers’ terms and conditions and the provision of information to users about a service provider’s procedures on content moderation, and
   
3. For e-commerce platforms, the gathering and display of trader information to consumers before allowing those traders to actually sell products on the platform.
   

For more information and expert guidance on the likely impact of the Digital Services Act and its obligations on your business, contact a member of our Technology team.

People also ask

What is the EU Digital Services Act?

The Digital Services Act (DSA) (Regulation (EU) 2022/2065) establishes a framework for an unprecedented level of transparency, accountability and fairness for digital services in the EU.

What are dark patterns under the DSA?

As described in Recital 67 of the Digital Services Act, dark patterns are “practices that materially distort or impair, either on purpose or in effect, the ability of recipients of the service to make autonomous and informed choices or decisions.”

The content of this article is provided for information purposes only and does not constitute legal or other advice.