What the EU's Digital Services Act means for big tech : Planet Money : The Indicator from Planet Money The European Union is poised to pass its latest big tech legislation package. The Digital Services Act could reshape how we interact with big online platforms. Today, we go through some of the highlights of the regulation.

EU leads the way on controlling big tech

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC’S “WAKING UP TO THE FIRE”)

DARIAN WOODS, HOST:

This is THE INDICATOR FROM PLANET MONEY. I'm Darian Woods.

WAILIN WONG, HOST:

And I'm Wailin Wong. The European Union has been on a roll when it comes to regulating tech companies, running laps around the U.S. The EU has crafted three major laws in the last few years, all with the aim of checking the power of online platforms.

WOODS: And the latest piece of legislation is called the Digital Services Act, or the DSA. It is a massive set of regulations, tackling everything from targeted advertising to recommendation algorithms to content moderation.

WONG: Today on the show, we dive into the Digital Services Act and look at how the EU's tough stance on big tech could reshape the online experience not just for people in Europe, but in the U.S. and around the world.

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WONG: The EU has really taken the lead when it comes to regulating major online platforms. And one recurring theme of these recent laws is this idea of getting more visibility into what tech companies know about their customers.

WOODS: Gabriela Zanfir-Fortuna is the vice president of global privacy at a think tank called the Future of Privacy Forum. And in a previous job, she lived in Brussels, and she worked on the first major law that kicked off this current wave of tech legislation in the EU.

GABRIELA ZANFIR-FORTUNA: Everybody cared about these things, and you could actually tell that by the very long working hours that people were putting into that whole process.

WONG: It was a lot of meetings and emails. So when the EU passed this big law in 2016, Gabriela and her coworkers went out to celebrate in a non-flashy way, befitting a group of data privacy experts.

ZANFIR-FORTUNA: We actually had small gatherings in the Brussels bubble, as we call it, completely private and just enjoying some of that Belgian beer and saying that this, you know, is something that was accomplished, and it's wonderful.

WOODS: Under that law, businesses had to start offering a way for customers to access all the data stored about them. So think about everything you've ever bought on Amazon, every comment you've ever left on a Facebook or an Instagram post - all of these digital breadcrumbs that were just scattered everywhere as we browsed the internet.

WONG: And sometimes, we don't even know where these breadcrumbs end up. Like, one time, I looked at some clothes online and closed the tab without buying anything, and then that same company sent me an actual postcard to my house.

WOODS: That's unbelievable.

WONG: I know. I hadn't filled out any information on this website. I'd only clicked around a little bit, but they somehow still managed to connect my online self with my actual physical address.

WOODS: They know where you live. And maybe that's an outlier example, but our online experience is highly customized. Companies use our personal data to target ads and recommend videos and social media posts to us all the time. Like, we've just gotten used to it.

WONG: And so if that first big law that Gabriela worked on was about being able to access personal data, this new law, the Digital Services Act, builds on that. It opens the door for the online experience to be a little less customized.

WOODS: So for example, Gabriela says an important provision of the DSA is a ban on advertising targeted to minors, to young people. It also bars companies from targeting ads based on something called special characteristics. These are things like religion, ethnicity and sexual orientation.

ZANFIR-FORTUNA: I would imagine that you would not necessarily be seeing Grindr ads, for example, if, let's say, the reason why you are seeing ads to the Grinder app was because you were tagged as a gay person based on your online activity.

WOODS: And this restriction on targeting doesn't just apply to ads. It also applies to all content that a platform would recommend. So under the DSA, platforms have to give people the option to say, please don't show me anything based on profiling. Just pretend like you don't know me at all.

WONG: The DSA also requires companies to disclose more information about how their recommendation algorithms work. In other words, European regulators want to peek behind the curtain, especially when it comes to the most powerful companies.

ZANFIR-FORTUNA: We're talking about very large online players and gatekeepers of the digital market.

WOODS: That's actually a technical word - very large online players, or V-L-O-P for short.

WONG: V-LOP.

WOODS: VLOP - voluptuous internet companies.

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WOODS: But however you're going to say the acronym, it basically just means a company who has more than 10% of the EU population in their monthly users - so basically 45 million people. We're talking Facebook, YouTube, Google. These companies have the most new rules to follow under the DSA.

DAPHNE KELLER: It needs a lot of ramp-up. It needs new hiring. It needs new tools built internally.

WONG: Daphne Keller directs the program on platform regulation at Stanford's Cyber Policy Center. She remembers the hand-wringing a few years ago when the EU was preparing the first big law - that's the one that Gabriela worked on - and that law's official name was GDPR. Sorry about all the acronyms.

KELLER: When the GDPR was pending, I went to a privacy lawyers conference that had a whole session on how to ask your CEO for the budget you were going to need for GDPR compliance. And the DSA is something like that.

WONG: What was their top tip?

KELLER: (Laughter) I think it was to be as scary as possible and mention how high the fines are.

WOODS: And that is a lesson that companies will need to learn now with this new legislation under the DSA. These fines could be up to 6% of a company's annual revenue. So for a company like Facebook, that could amount to billions of dollars. European regulators are very serious about making sure companies follow the rules.

WONG: And there are a lot of rules, especially around disclosing information. For example, when companies take down a piece of content that's deemed illegal - like, say, it violates a country's hate speech laws - they'll have to notify the user and explain what happened. They'll also have to send a copy of that notice to the European Commission to put in a big database. On top of that, there are annual audits and risk assessment reports. It's like a Swiss Alps mountain range worth of paperwork, but it should all be really helpful to European policymakers.

KELLER: The EU has these career civil servants who have been giving serious thought and study to these questions for 10 years and doing consultations and learning the nuts and bolts of how content moderation works.

WOODS: I can't help but think of that congressional hearing where people like Mark Zuckerberg were grilled by politicians who - I don't know - didn't seem like they had really opened up Instagram recently. Do you remember that, Wailin?

WONG: Yeah, I do remember that because they didn't seem like they fully grasped how these platforms work. In contrast, like Daphne says, European civil servants have been deep in the details. So they've basically been setting the standards for tech and exporting them to the rest of the world for years now. The U.S. is lagging behind.

KELLER: In the U.S., you know, Democrats mostly want platforms to take down more content. Republicans mostly want platforms to take down less content, "to stop censoring people," quote, unquote. And that leads to a lot of stalemate.

WONG: Daphne says there was plenty of debate in the EU about this, too. European civil society groups were concerned that heightened regulatory power over online speech could be really dangerous in the hands of future government leaders, maybe even current ones.

WOODS: Like, we have seen privacy laws, in some parts of the world, being used to stop journalists from regular reporting. And another concern is, like with any big regulation, it's usually going to be the big established businesses - in this case, the very large online players - that can afford the stacks of lawyers needed to comply.

WONG: Yeah. There are still a lot of unknowns about how the details of the DSA will play out. But the new rules have the potential to make the internet experience feel pretty different for people in Europe. And because the law affects global companies, it'll be hard to keep the effects contained within geographical borders.

WOODS: So it sounds like we're on the path to fewer targeted ads. Like, we won't have this experience that feels like we're just feeding into this secret dossier that somebody out there has on us.

WONG: Yeah. Now, the only thing I need to worry about is receiving unsolicited postcards in the mail from random internet companies.

WOODS: That makes sense.

WONG: Yeah (laughter).

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WONG: This episode of THE INDICATOR was produced by Jamila Huxtable with engineering from Gilly Moon. It was fact-checked by Corey Bridges. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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