The E-Commerce Directive vs. the Digital Services Act: What’s Changing for Platform Liability?

Once upon a time in the early 2000s, when the internet was still figuring out what it wanted to be, the European Union introduced the E-Commerce Directive (ECD)—a law that shaped the legal DNA of how online platforms operate. Fast forward two decades, and it turns out the internet had a major growth spurt. From humble forums and email chains, we’ve evolved into algorithmic marketplaces, influencer megaphones, and fake-news factories.

Enter the Digital Services Act (DSA)—the EU’s shiny new regulatory overhaul, aiming to bring platform liability rules out of the dial-up era and into the age of TikTok.

But what’s actually changing? Is the ECD being tossed in the bin? What do platforms need to worry (or cheer) about now?

Let’s compare the old and the new—and highlight the key shifts in platform liability that every operator, entrepreneur, and policy nerd should know.

A Quick Refresher: What Was the E-Commerce Directive?

Adopted in 2000, the E-Commerce Directive was a pioneering attempt to regulate the fledgling digital economy across EU member states. It introduced some cornerstone concepts:

Limited Liability for Intermediaries

• Hosting providers (like forums, marketplaces, ISPs) were not liable for illegal content unless they had actual knowledge of it.

No General Monitoring Obligation

• Platforms weren’t required to proactively monitor user content. This kept legal costs low and innovation flowing.

Country of Origin Principle

• Platforms only needed to follow the rules of the EU country they were established in—not every country they served.

The ECD was a foundational text, but let’s be honest: the internet outgrew it like a teenager outgrows their high school hoodie.

Why the Digital Services Act Was Born

The online ecosystem today is bigger, faster, and messier. With the rise of disinformation, platform monopolies, dark patterns, algorithmic biases, and digital harms, regulators needed more than a gentle reminder—they needed legal renovation.

Thus, in 2022, the Digital Services Act (DSA) was adopted as part of the EU’s broader digital strategy (alongside the Digital Markets Act (DMA)).

Think of the DSA as a smart upgrade—retaining key principles of the ECD but adding much-needed clarity, teeth, and transparency.

Key Continuities Between ECD and DSA

The DSA doesn’t scrap the ECD altogether. It keeps some of its core logic:

• Still no general monitoring obligation — Platforms aren’t forced to scan everything.
• Still conditional liability — If platforms act quickly when made aware of illegal content, they generally avoid legal exposure.

So no, the DSA isn’t coming for your meme page—unless your meme is inciting hate or selling counterfeit sneakers.

What’s Actually Changing Under the DSA?

Now for the juicy part. Here’s where the DSA starts showing its muscles.

1. Notice-and-Action Becomes Standardized

Under the ECD, there was no EU-wide rule on what a takedown notice should look like. Result? Chaos.

DSA introduces structured, transparent “Notice and Action” procedures, including:

• What must be included in a complaint
• How platforms should respond
• Requirements to notify both the user and the complainant

Goodbye legal grey zones; hello standard form fields.

2. Know Your Business Customer (KYBC)

Marketplaces now must verify sellers’ identities.

• Business users must provide proof of legitimacy
• Platforms are liable if they knowingly host rogue traders

This is the EU’s way of saying: “Stop pretending you don’t know who’s selling that fake Gucci bag.”

3. Differentiated Obligations by Platform Size

Welcome to the new EU class system:

• Regular platforms have basic duties
• Very Large Online Platforms (VLOPs)—those with 45+ million monthly EU users—get the deluxe treatment (think: audits, risk assessments, compliance officers)

The bigger your influence, the higher your compliance bill.

4. Algorithmic Accountability

Platforms must:

• Explain how recommendation systems work
• Offer users control (e.g., toggle off personalization)

Transparency isn’t just a buzzword anymore—it’s a legal requirement.

5. Mandatory Terms Transparency

Platform terms of service must be:

• Clear, readable, and explain content moderation policies
• Publicly available and consistently enforced

Say goodbye to those 97-page T&Cs that require a law degree and a magnifying glass.

6. Trusted Flaggers and Priority Handling

Authoritative NGOs or government entities can be designated as “trusted flaggers”.

• Their takedown notices get expedited treatment
• Platforms must cooperate with them proactively

Think of it as a fast-track lane for responsible whistleblowers.

Platform Liability: Old vs. New

Enforcement and Penalties

Unlike the ECD, which left much to national interpretation, the DSA brings out the regulatory stick:

• Fines up to 6% of global turnover
• Periodic penalty payments for ongoing violations
• Enforcement by the European Commission (for VLOPs) and national regulators

If you’re a platform operator and your motto was “move fast and break things,” now it’s more like “move fast and lawyer up.”

What Platforms Should Be Doing Right Now

Whether you’re a start-up marketplace or a tech titan, here’s your to-do list:

1. Map your user content flows — Identify risks and choke points
2. Implement structured takedown systems — Don’t wait for complaints to pile up
3. Review and simplify terms of service — And make them actually readable
4. Verify your sellers — KYBC isn’t optional anymore
5. Prepare for audits — If you’re VLOP-sized, your homework is due

Pro tip: Don’t see compliance as a burden. Use it to build trust with users and partners.

Final Thoughts: From Safe Harbor to Responsible Harbor

The E-Commerce Directive was visionary for its time, creating a safe harbor that allowed the internet to flourish. But safe harbors without anchors can drift. The DSA doesn’t eliminate that safe space—it anchors it in accountability.

For platforms, the message is clear: freedom to operate comes with responsibility to protect.

Yes, the DSA means more paperwork. Yes, it means compliance departments will grow. But it also means a healthier digital ecosystem, where users feel safer, sellers are more trustworthy, and platforms earn their power through transparency—not just scale.

The digital seas have changed. It’s time to sail smarter.