The potential impact of the EU’s Digital Services Act (DSA) (DSA) on media companies is already apparent, even though the DSA does not, for the most part, apply before 17 February 2024. Measures to prepare for this complex new piece of European legislation are already in full swing. But before businesses can prepare to comply (for an overview of obligations, see here), they need to work out whether and to what extent their services fall within the DSA’s scope.
This can be particularly challenging for certain types of media companies where the situation may not be clearcut, in particular, those which do not have an online platform business model as a core part of their offering, but are still, to some extent involved with or connected to such structures. Media companies which sit in these grey areas need to analyse their business models carefully to determine whether or not they are caught by the DSA, including considering whether or not they fall within the SME exemption of Articles 19 and 29 DSA.
This process is far from straightforward. The only point of reference at the moment is the DSA itself as there is no accompanying guidance or related case law. Both the recitals and the operative provisions of the DSA are broad or ambiguous and do not necessarily provide sufficient clarity for media companies with business models which do not sit clearly within relevant categories.
Here we look at some of the challenges faced by certain types of media company when assessing whether and to what extent they are in scope of the DSA.
Are you an online platform?
The DSA defines an online platform as a hosting service that, at the request of a recipient of the service, stores and disseminates information to the public, unless this is a minor and purely ancillary feature intrinsically linked to another service or a minor functionality of the principal service and, for objective and technical reasons, cannot be used without the other or principal service, whereby the integration of such feature or functionality into the other service is not meant to circumvent the DSA.
The wording of the definition leaves a lot of room for interpretation. Recital 13 DSA does provide some additional clues, suggesting that the “minor and ancillary” exception is likely to apply to the comment section of an online newspaper, but unlikely to apply to the comment functionality of a social network. This is because the comment functionality of the latter is not a minor feature, but is rather essential to its business model.
This is, however, only helpful up to a point. Between the two examples provided lies a wealth of nuance and complexity about which no guidance is given. Given the range of digital services in the market, more detail about what qualifies as minor and ancillary is required to help media companies understand whether or not they are impacted.
While guidance is much needed, it is unlikely to be published in the short term. It seems that the European legislator intends to wait to see whether and what issues emerge and will only take corrective measures where necessary. Until then, media companies should err on the side of caution and not interpret the exclusion too widely, not least because case law requires that exceptions to obligations be narrowly interpreted. In this context, particular attention should be given to the scope of the respective service’s functionalities and features compared to a stereotypical comment section in an online newspaper, and the existing degree of dependency between the service in question and the other or principal service.
Challenges with the separate classification of services within hybrid services
Another challenge that media companies which do not fall easily into the DSA’s definitions have to deal with is the fact that each service within their overall hybrid service must be considered separately. Consequently, situations may arise where one service is subject to the DSA while others are not, or where different services are subject to different classifications and duties under the DSA. This may sound reasonable in theory, but in practice, it can be far from easy to separate out individual services which are often highly interwoven.
Are you a hosting service?
The DSA’s definition of a hosting service as a service that consists of the storage of information provided by and at the request of a recipient also poses problems, again because it is so broad.
The issue is that that just about any online service will store recipients’ information. For instance, recipients may enter their credentials in web forms, choose usernames, when registering an account, leave comments, reviews and ratings, communicate with others via chat, determine and store preferences or generate information in conjunction with their use of a service.
When should it be considered that the information was provided by and stored at a recipient’s request? It's reasonable to conclude that not all types of service storing recipient-generated information are intended to fall within the DSA’s definition of a hosting service. For instance, where the use of a service by a recipient automatically generates information of the respective recipient, without the recipient having any influence or control over this (other than not to use the service), this arguably cannot be intended to be classified as a hosting service. This type of service and many others do not create the kind of illegal content from recipients that the DSA aims to regulate.
It’s also worth remembering that the DSA does not apply to service providers’ own content for which they are generally responsible and directly liable. This is explicitly set out in the definition of “intermediary services” and in Recital 18, which particularly expresses that the safe harbour principles (Articles 4 to 8) do not apply to content that was created by the service providers themselves or under their editorial responsibility.
Here again, there are no clear thresholds for qualification, nor is there likely to be more guidance on this in the short term.
What should media companies do now?
Media companies which are borderline cases in terms of the DSA’s definitions are confronted with a dilemma. They can choose to take a risk-based approach and argue that they are not subject to the DSA. The risk is that a competent authority could come to a different conclusion, potentially imposing fines for non-compliance of up to 6% of annual global turnover of the preceding financial year. This could also lead to compensation claims by recipients. An overly cautious approach, however, will lead to unnecessary and onerous duties and compliance efforts. Media companies which do not easily fit within the DSA’s definitions should keep a close eye on developments in order to be able to adapt their chosen strategy if necessary.
