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Intermediary services should “earn their liability exemptions”

In order for the Digital Services Act (DSA) to achieve a safe and more trustworthy online environment, companies that do not comply with the DSA’s due diligence obligations should not be entitled to the DSA’s liability exemptions.

The proposed DSA aims to establish rules that would create a “a safe and more open” digital environment and ensure less exposure to illegal content. To achieve this, the Commission has proposed introducing graduated due diligence obligations that apply to different categories of intermediary services (see Chapter III of the proposal).

These due diligence obligations unfortunately often fall short of what is needed in order to ensure consumer safety and the protection of legitimate companies.

The Commission maintained the E-Commerce Directive’s liability privileges for intermediary services that qualify as “mere conduit”, “caching” or “hosting services”, but failed to link these liability exemptions with companies’ compliance with the baseline due diligence obligations set out in the DSA.

This is a grave shortcoming. Experience shows that too many intermediaries make little or no effort to comply with regulatory obligations, including in the fields of consumer and data protection, when the risk of noncompliance is limited to regulatory fines, apparently factoring the risk of fines in as a cost of doing business. Making compliance with the DSA’s due diligence obligations a pre-condition of liability privilege eligibility would create a real, impactful incentive for compliance and have a dissuasive effect on such intermediaries.

It would also ensure that only diligent, trustworthy and reliable intermediaries benefit from the DSA liability privileges, thus contributing to a higher level of safety and trust in the online environment to the benefit of all stakeholders.

The idea of making the exemption from liability conditional on compliance with due diligence obligations was briefly considered by the Commission, but dismissed. The arguments invoked by the Commission are, however, unconvincing (see impact assessment Part 2, Section 3.4, pages 165-166):

  1. The Commission argues this would only “incentivise” but not “require” compliance with the due diligence rules. This is incorrect, as compliance with the due diligence obligations can be mandatory in addition to being a condition of eligibility for the liability exemptions. There is no need to choose between the two approaches, in fact they are complementary.
  2. The Commission argues it would require a more systematic and therefore burdensome supervision of compliance with due diligence rules. That is also incorrect as eligibility for the liability exemption does not need to be assessed by the DSCs.  As the Commission argues elsewhere, the liability exemption is not a static status an intermediary acquires, but rather something that needs to be assessed on an ad hoc, case-by-case basis when liability is invoked, i.e. by the courts rather then by the DSCs.

We believe that the DSA offers a unique opportunity to achieve the goals of creating a safe, trustworthy and diverse online environment and to ensure that what is illegal offline, is illegal online. Making compliance with the due diligence obligations a pre-condition for eligibility to benefit from the liability exemptions would bring a coherence to the DSA that is currently lacking. It would positively impact compliance with the DSA and guarantee that only responsible and trustworthy intermediaries are able to benefit from its liability exemptions.

To this end we have proposed the attached two amendments.

We thank you for your attention and would welcome the opportunity to discuss this issue with you further.

Please see the proposed amendments and full list of signatories here.

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