The Digital Services Act (DSA) should ensure that companies established outside the EU and that target the European market must abide by European rules, Internal Market Committee rapporteur on the DSA Alex Agius Saliba said.
After months of negotiations, the outcome of the vote in the Internal Market and Consumer Protection Committee has been issued, he said.
MEPs' demands on how digital services, including online platforms and marketplaces, should be regulated were set out in a vote in the Internal Market Committee on Monday.
The committee vote resulted to 39 voted in favour, 1 against and 5 abstained.
"Although it was not always easy, we have all agreed that the Digital Services Act is not a threat, but an opportunity to provide a safer digital environment both to users and companies", he said.
Agius Saliba added that "nowadays we are living in a world where digital services and platforms are of essential importance, both to our social and economic life."
"Our lives during the pandemic would have been very different without digital services and infrastructure, thus they have helped greatly."
He explained that online platforms and digital services have largely evolved in the last 20 years. They have become new utilities and they will only continue to grow in the future.
"It is imperative that we recognise that a new common approach is to be applied to all digital services, built on trust, on choice and on a high level of protection," he said.
In a "legislative initiative" report approved in the Internal Market and Consumer Protection Committee, MEPs request that the Commission addresses and tackles current shortcomings in the online environment in its DSA package, due to be presented by the end of the year.
Agius Saliba said that the report considers it fundamental that all digital service providers established in third countries must adhere to the rules of the DSA when directing their services to consumers or users in the EU.
One central issue is to protect people and EU countries from online harmful business models.
He continued by saying that "our proposals are also targeting existing harmful business models."
The EU legal framework for digital services - the e-commerce directive - was adopted 20 years ago. Therefore, this needs to be updated to reflect the rapid digital transformation, he said.
He explained that a one-size-fits-all approach should be avoided, and the committee recommends distinguishing between economic and non-economic activities, and between "different type of digital services hosted by platforms rather than focusing on the type of the platform."
The report also addresses illegal, counterfeit and unsafe products.
"Consumers should be equally safe when shopping online or in stores. Platforms and online intermediation services will need to improve their efforts to detect and take down false claims and tackle rogue traders."
Consumers should also be promptly informed by online marketplaces once a non-compliant product they have purchased has been removed from their site, he said.
This will help address the problem with misinformation, with misleading and illegal content and also the sale of unsafe and fake products online. Therefore, "we are trying to create a level playing field."
Another way to address harmful practices is through stricter provisions targeting harmful advertising practices including digital nudging, microtargeting, recommended systems and also preferential treatment.
"We have introduced several obligations such as the obligation to disclose information on the advertisement's identity. In addition, manipulation practices of targeting people based on their age, gender, religion, ethnicity and so on must stop."
"We are also proposing a notice-and-action mechanism which is an effective and legally enforceable mechanism so that users can notify online intermediaries about potentially illegal online content or activities, and to help the latter to react quickly and be more transparent regarding the actions taken on potentially illegal content."
He added that the new rules should preserve the underlying legal principle that passive online intermediaries should not be held directly liable for the actions of their users.
Another essential element involves the distinction between illegal and harmful content.
MEPs call for a strict distinction to be made between illegal content, punishable acts and illegally shared content on the one hand, and harmful content on the other (the legal liability regime should concern "illegal content" only as defined in EU or national law).
Harmful content, hate speech and disinformation should be addressed through enhanced transparency obligations and by helping citizens to acquire media and digital literacy regarding dissemination of such content.
In addition, a "Know your Business Customer" principle should also be developed, he said, "as it will require platforms to check and stop fraudulent companies using their services to sell their illegal and unsafe products and content."
"Such a measure will help address one part of the problem with disinformation, misleading, or illegal content, and the sale of unsafe and fake products online", said Agius Saliba.
He added that the DSA should guarantee the consumer's right to be informed if a service is enabled by AI, makes use of automated decision-making or machine learning tools or automated content recognition tools, as well as their right to redress.
"They should be able to opt out and be given more control of the way content is ranked."
MEPs also call for rules to ensure non-discrimination and understandable explanation of algorithms.
MEPs want the Commission to introduce additional rules on targeted advertising and micro-targeting based on the collection of personal data and to consider regulating micro- and behavioural targeted advertising more strictly in favour of less intrusive forms of advertising that do not require extensive tracking of user interaction with content.
Agius Saliba hoped that this result will be repeated in the plenary vote which is expected to take place during the 19-22 October session.