Why Startup Founders Should Participate In The European Commission’s Digital Services Act Consultation

June 11, 2020

Last week the European Commission launched several consultations on the Digital Services Act, one of the most important pieces of legislation in the digital (and otherwise) arena, as it will affect all online platforms in a plethora of ways.  At Allied for Startups, we sometimes see ourselves as translators, in that we want to bridge the divide between policy makers and startup entrepreneurs by translating technical policy into simple and clear language. This makes it easier for entrepreneurs to share their ambitions and concerns with policy makers. That way, startup founders can do what they are best at, innovating. For that reason, in this post we want to make sure that we explain what an EU consultation is, how it works and why as a startup founder, you have an opportunity to make your voice heard!

What are EU consultations?

European Commission consultations are a way for the European Commission to collect the views of the citizens and stakeholders when designing legislation. Public consultations are opened before a new legislative proposal. It gives EU citizens and companies an opportunity to express their opinion on an upcoming law or to assess the update of an EU law before the draft legislation is published. They are open to everyone, as the intent is to democratize access to the policy-making process and to give everyone the opportunity to have a voice and shape policy.

How do they work? 

As a citizen or a stakeholder, you fill in a questionnaire which can take various forms and lengths. Your response to a consultation can be public or anonymous. Public consultations are usually open 12 weeks and they can be answered in any of the EU’s official languages. This consultation in particular has 6 parts 1) Safety and responsibility, 2) Liability regime, 3) Gatekeeper platforms, 4) Advertising and smart contracts, 5) Self-employed individuals and platforms, 6) governance and enforcement

What is the Digital Services Act and how will it affect startups?  

In short, it’s the revamping of the 2000 E-Commerce Directive (ECD) which has been the invisible skeleton for much of the digital economy. A few important features of the E-Commerce Directive have served as basic principles in which the platform economy has thrived.

Intermediary liability exemption, which exempts online platforms from being legally liable for user-generated content if they fulfill conditions like a notice-and-takedown framework. In other words, when they become aware of illegal content they take it down. This has provided platform startups with clear rules of the game so that they can scale without being liable for the contents of the ratings, reviews, or texts that users upload.

What can be improved on the intermediary liability framework? We believe that if we want entrepreneurs to step up and tackle illegal content proactively, we want to incentivise them to do so. In the current E-Commerce Directive, the more you perform any type of editing activities on the content, the higher the chance of becoming liable. This can be improved! Platforms won’t be incentivised for being proactive if they are increasingly liable for doing so.

“No general monitoring obligation or the prohibition of general monitoring obligations. It lays down that startups cannot be obliged to monitor all user-generated content. We’ve seen in the Copyright debate that the scale of the online platform economy makes content filtering unfeasible. For startups, blanket content filtering is undesirable for fundamental reasons but also for technical reasons, since there simply are no filters that meet industry standards. It is therefore important that when we explore what more we can do and what incentives we can set, we uphold a strong no general monitoring obligation.

Thirdly, let’s rebuild a strong country of origin system. This means that where applicable, EU digital services need only comply with the rules of the Member State in which they are established – so that startups do not have to scale-up in Europe 27 times. We believe this reform is a great opportunity for EU bodies to clarify and harmonise this principle where possible.

Why should you participate?

We know from our members and partners that this law will affect the entire ecosystem. Many startups are platform intermediaries and almost all startups and the economy at large use platforms – be it a web design, marketplace, logo maker, image finder, calendar tool, video conference. Let’s make sure policy makers know how startup ecosystems operate and how interconnected they are!

The DSA will be the key digital legislation in this mandate. It’s important for startups platforms to participate in the consultation process in order to have their voices heard at the institutional level. Startups are a fundamental part of our economy, especially in the post COVID-19 recovery.

We know how technical some of these questions can be. At Allied for Startups, we can provide you with the expertise and knowledge to help you navigate this consultation. Don’t hesitate to reach out should you have any questions!