The EU Digital Services Act (DSA) is a relatively new regulation designed to ensure a safe, predictable and trusted online environment. It applies to a wide range of digital services, including Saas companies whose online platforms or services involve B2B or B2C services, user interactions or data hosting. And whilst it’s an EU law, it also applies to companies who may not be based in the EU but target EU customers/users.
TL;DR
The EU Digital Services Act (DSA) introduces new rules for platforms and services targeting EU users. SaaS businesses must:
- Evaluate their connection to the EU market.
- Update terms of service to include clear content moderation policies.
- Implement mechanisms to effectively handle illegal content reports and enforce their terms.
- Appoint an EU representative if based outside the EU.
UK businesses should assess compliance now, as future legislation like the Online Safety Bill may bring similar requirements.
What businesses are impacted?
The DSA applies to any digital services companies providing “intermediary services”, which include cloud services, web hosting, and platforms that enable users to share, store or manage content. It means that most B2C and B2B Saas businesses will be impacted.
And as a UK-based business, the DSA will apply if your Saas/ online service has a substantial connection to the EU. So even if you don’t have a physical presence in the EU, if you actively target customers/ users there it will apply. Merely having your service available in the EU may not be considered a substantial enough connection, but targeting may include:
- providing services to a significant number of EU users or customers (whether B2C or B2B) or
- having your platform available in EU languages, using local currency, or specifically advertising to EU users.
DSA Obligations
If the DSA applies to your business, the following are the core obligations:
1. Designate a Point of Contact/Legal Rep (if outside the EU):
You’ll need to appoint a single point of contact for users and authorities to handle complaints and issues related to your service; and
If your business is not based in the EU, you’ll need to appoint a legal representative within the EU to liaise with authorities. See our blog on appointing an EU Rep here.
2. Terms & Conditions Compliance:
Your terms and conditions must clearly explain how you manage content on your platform, especially regarding:
Content moderation policies.
Procedures for suspending or terminating services in response to violations of your platform rules.
3. Transparency Reports:
If you operate as an online platform (e.g., allowing users to post content), you’re required to publish annual transparency reports, which outline your content moderation efforts, how you enforce your terms of service, and any action you’ve taken against illegal content.
4. User Content Management:
If your platform hosts user-generated content (e.g., comments, forum posts, etc.), you need a notice-and-action mechanism to handle user reports of illegal content. And you’ll need to act timely, objectively, and proportionately when addressing the user reports/complaints.
There is a liability exemption for hosting services, meaning your business isn’t generally responsible for content uploaded by users; however, if you become aware of illegal content (e.g., through a user report), you must act quickly to remove it to maintain this exemption.
And if your SaaS platform grows significantly (eg. to millions of EU users), many more stringent obligations apply to Very Large Online Platforms (VLOPs under the DSA), such as around advertising transparency, protection of minors and risk assessments.
Next Steps
If your business is impacted, here are some steps to take stay compliant with the DSA:
- Assess your connection to the EU: if you’re a UK business with no physical EU presence, evaluate whether your SaaS platform targets or serves EU users and the extent to which you do to determine if the DSA applies. If it does, the following steps will apply.
- Assess potential for illegal content: evaluate if and how illegal content could be posted or shared on your platform.
- Ensure content moderation capabilities: make sure your platform can remove or block illegal content quickly if needed, particularly when responding to user reports.
- Update terms and conditions: review and update your terms of service to include clear content moderation policies and a transparent process for handling user complaints.
- Implement user content reporting: create clear processes for users to report harmful or illegal content and set up criteria internally for how you will handle such complaints.
- Monitor future legislation: be aware that new regulations, such as the UK Online Harms Act, may require additional content moderation or user safety measures, so stay updated on relevant legislative changes.
In short, if your SaaS or online platform targets EU users, you’ll need to assess your compliance with the EU Digital Services Act. If you’d like to discuss how the DSA impacts your business and the steps you need to take, get in touch at info@legaledge.co.uk
