Introduction
The internet has evolved into the foundation of global trade, communication, and creativity. But with that power comes responsibility — especially for online platforms and businesses that shape our digital lives. To address this, the European Union has introduced the Digital Services Act (DSA), a groundbreaking law designed to make the online world safer, more transparent, and accountable.
For online businesses of all sizes, the DSA is more than just another regulation — it represents a major shift in how digital services operate. Even if your business is outside the EU, this law could still affect you if you serve EU-based customers.
What Is the Digital Services Act?
The Digital Services Act is a new EU regulation that updates and replaces parts of the older E-Commerce Directive. Its purpose is to create a fair and transparent digital environment by regulating how online intermediaries — like social media networks, e-commerce stores, search engines, and marketplaces — handle user content, advertising, and data.
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The DSA applies not only to companies based in the EU but also to any business that targets or serves EU users — whether through online stores, ads, or digital services.
Who Does It Apply To?
The DSA covers a wide range of digital service providers, including:
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Online marketplaces like Amazon, eBay, and Etsy.
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Social media platforms such as Facebook, X (Twitter), and TikTok.
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Hosting services and websites that allow user-generated content (for example, product reviews or forums).
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Search engines and content platforms.
Smaller businesses, such as startups and micro-companies with fewer than 50 employees or under €10 million in annual turnover, are generally exempt from some of the stricter obligations. However, they still need to comply with the core transparency and user safety rules.
Key Obligations Under the DSA
1. Handling Illegal Content
Platforms must provide clear and easy-to-use systems for users to report illegal content, goods, or services. Once notified, businesses are required to act quickly to remove or restrict access to the reported material.
If content or accounts are removed, the affected user must be informed of the reason and given the right to appeal. Certain entities, known as “trusted flaggers,” will have priority when reporting illegal or harmful content.
2. Transparency and User Rights
Online businesses are now required to be much more transparent about their operations. This includes:
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Clearly explaining how content moderation works and what rules apply to users.
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Publishing regular transparency reports about removed content, user complaints, and enforcement actions.
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Providing users with statements of reasons whenever their content is restricted or deleted.
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Being open about how advertising and algorithmic recommendations work.
The DSA also bans targeted advertising that uses sensitive personal data or targets minors.
3. Risk Assessment and Accountability
Very large online platforms must conduct regular risk assessments to identify how their services could spread illegal content, misinformation, or harm users. They must then implement measures to reduce those risks and prepare crisis response plans for major events, such as terrorist attacks or disinformation campaigns.
In some cases, independent audits may be required to ensure compliance.
4. Know Your Business Customer (KYBC)
Marketplaces and platforms that allow third-party sellers are required to verify the identity of those business users. This means collecting and storing details such as names, contact information, and registration numbers. This measure is designed to prevent scams, fake listings, and counterfeit goods.
5. Content Liability and Safe Harbors
The DSA continues the principle that platforms are not automatically liable for illegal content posted by users — as long as they act promptly once they become aware of it. However, because of the new obligations around monitoring, transparency, and reporting, businesses will need to be more proactive in handling potential violations.
What It Means for Online Businesses
Even if your business is not located in Europe, the DSA could still apply if you sell products or provide services to customers in the EU. That means you’ll need to ensure your operations meet DSA standards.
Here’s what online businesses should start doing now:
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Update content and moderation policies — Make them public, clear, and easy to understand.
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Create a reporting system — Allow users to flag illegal or harmful content.
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Be transparent about ads and algorithms — Let users know why they see certain ads or recommendations.
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Verify business sellers — Check the identities of third-party merchants on your platform.
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Publish transparency reports — Regularly share data about content removals and moderation actions.
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Prepare for compliance audits — especially if you operate a large or fast-growing platform.
Risks of Non-Compliance
Failing to comply with the DSA can result in significant penalties. Large companies could face fines of up to 6% of their global annual revenue, while smaller businesses could face service restrictions or legal actions within the EU.
Beyond fines, non-compliance can damage your brand’s reputation and erode user trust — something far more costly than a regulatory penalty.
Opportunities in Compliance
While the DSA brings new obligations, it also creates opportunities for responsible businesses:
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Building user trust through transparency and fairness.
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Enhancing brand reputation by demonstrating accountability.
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Improving content quality through better moderation systems.
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Staying ahead of the competition as compliance becomes a global expectation.
The DSA may set a new global standard, much like the GDPR did for data protection. Businesses that act early can turn compliance into a competitive advantage.
Conclusion
The Digital Services Act represents a major step toward a safer and more transparent digital environment. For online businesses, it’s both a challenge and an opportunity — a chance to strengthen compliance, build trust, and operate more ethically in a connected world.
Whether you’re running a small e-commerce store or a large online platform, now is the time to review your practices, update your policies, and prepare your business for this new era of digital accountability.