EU Digital Services Act: Creating a framework that protects consumers and enables small businesses to thrive
In late 2020, the European Commission published its Digital Services Act (DSA) proposal, which introduced new EU-wide rules on how platforms should address illegal content, platform liability and responsibility. Etsy is committed to promoting safety online and we strongly support the European Commission’s DSA proposal, which we believe represents a solid foundation in tackling illegal content online in an efficient way across all types of services.
As the EU legislative process mandates, the European Parliament and Council of the EU (represented by the 27 Member States) must now adopt their own positions on the DSA and eventually reach a common agreement. Unfortunately, both the European Parliament and the French government have recently drastically shifted the debate by introducing new due diligence obligations on marketplaces as well as a strict liability model. These proposals favor the largest retailers and online platforms at the expense of small businesses and individual sellers, limiting economic opportunities for many European small businesses and individual artisans, crafters, and makers.
Today, I sent a letter to key members of the European Parliament, the French Government, the European Commission and other key stakeholders to share our concerns regarding these newly-introduced amendments. We absolutely believe that marketplaces have a responsibility to help protect consumers, but also believe those obligations should be aligned with their capabilities, knowledge, and the role they play in the market. We can protect consumers in a way that also enables small and microbusinesses to thrive. I invite you to read the letter and stand with small and microbusinesses throughout Europe:
I hope this letter finds you well.
As the Digital Services Act (DSA) discussions are rapidly progressing in the European Parliament and Council of the EU, I’d like to express my deep concern regarding newly-introduced amendments by the French Government and DSA IMCO rapporteur MEP Schaldemose that would impose additional liabilities on marketplaces. These provisions would hurt small businesses, including Etsy’s community of sellers by limiting their ability to sell items online. As major players increasingly dominate the ecommerce space and our economies continue to be impacted by an unprecedented global health crisis, we need to protect small businesses so not only do they survive but also thrive. I strongly urge you to reject these counterproductive amendments from being added to the DSA.
Etsy is an on-ramp for entrepreneurship, enabling small businesses in Europe and around the world to thrive online
Etsy is a global marketplace for unique and creative goods, and our platform enables nearly 5 million creative entrepreneurs around the world to market and sell their goods to over 90 million buyers who are looking for items that are not mass produced and intended to make both everyday and meaningful occasions feel special as well as reflect their sense of style.
Etsy has sellers in every country in the EU. Two of our major European markets are France and Germany, and in these two countries alone we have nearly 200,000 active sellers who run their small business on our marketplace. Most of these sellers are women and businesses of one, and nearly all run their creative businesses out of their homes. For approximately one third of Etsy sellers, their creative business is their full-time occupation and, for the rest, their creative business supplements other types of jobs and income. In many ways, Etsy provides a low-cost means to start a business and, in fact, half of Etsy sellers say they start their businesses to help with a financial challenge.
An intermediary product liability model protects consumers while allowing small businesses to thrive
We strongly support the European Commission’s DSA proposal and believe it represents a solid foundation in addressing the goal of tackling illegal content online in an efficient way across all types of services. We particularly welcome the fact that the proposal maintains key principles of the e-Commerce Directive, including the limited liability framework, prohibition of general monitoring obligations, and country of origin principle.
Intermediary liability protections in particular enable smaller platforms like Etsy to operate at scale and offer opportunities to entrepreneurs around the globe. Without such protections, Etsy could be forced to screen every item before allowing it on our site, a resource-intensive activity that would be nearly impossible to automate in many circumstances, given the diversity of products, shops and seller locations on Etsy. It’s important to note that most of the +90M items for sale on Etsy are handmade or vintage items, not mass market goods.
The new amendments put forth by France and included in the draft IMCO Report represent a drastic departure from the initial proposals. These new proposals would create a strict liability model, which favors the largest retailers/e-tailers and would have a significant negative impact on small businesses’ ability to compete with them.
As a pure third party marketplace, we have a relationship with our independent sellers for the services we provide to them, which is why Article 22 on the traceability of traders (a.k.a KYBC) is a due diligence obligation we fully support under the DSA and already take very seriously. The role that we play in providing our marketplace differs significantly and should be distinguished from the role played by many other marketplaces. On Etsy, sellers are responsible for making or sourcing their items, setting prices, listing the items on Etsy, interacting with buyers, processing orders, and shipping items directly to the end customer. Etsy never takes control of, or assumes title to, the physical items sellers offer. We are therefore heavily reliant on information provided by our sellers (i.e. written descriptions, tags/keywords, listing images). As such, going beyond verifying traders’ identity, and linking liability to due diligence obligations around the safety of products themselves is far-reaching and disproportionately harms small businesses and individual artisans that sell their unique products on smaller platforms like ours.
While conversations around the role and responsibilities of marketplaces and consumer protection are important, they need to be very carefully considered due to unintended consequences and significant negative impacts on the small businesses we host. This is why we support making those thoughtful deliberations in the context of the upcoming review of the General Product Safety Directive (GPSD). Instead, the direction of the current DSA debate is leaning towards a strict liability model for marketplaces, which would likely favour larger players that, due to their size, generally control the goods sold on and exercise control over the sellers on their marketplaces.
A strict liability model could threaten Etsy’s ability to remain an unjuried marketplace, which could limit our ability to provide economic opportunities to millions of microbusinesses, including many across the European Union, most of whom are women. If strict liability would be imposed on marketplaces, a platform like Etsy could be required to undertake costly and invasive vetting processes of the +90 million items sold by independent sellers, many of which are custom and/or handmade and do not even exist until ordered. This would dramatically increase the costs of opening a shop on Etsy — (or any small to mid-sized marketplace) — making that economic opportunity far less accessible to many Europeans. If the cost of doing business increases, it is likely that many of Etsy’s creative entrepreneurs may opt out of selling across the EU.
Although we are opposed to the recently-introduced proposals, I want to reiterate that we are supportive of the European Commission’s DSA proposal. We absolutely believe that marketplaces do have a responsibility to help protect consumers in ways that are aligned with their capabilities, knowledge, and the role they play in the market. We share policymakers’ concerns, and frankly, our business would fail if consumers don’t believe that Etsy is a trusted place to find their favorite independent shops. That’s why we continue to make significant investments in the people and technology that underlie our marketplace trust and integrity functions, and move quickly to identify and remove potentially harmful content. We also publish an annual Transparency Report, which provides visibility into how we protect our marketplace because we believe that public reporting builds trust in our marketplace and demonstrates our commitment to our community.
We strongly urge you to reject any additional product liability provisions being added to the DSA. While considerations around the role and responsibility of marketplaces are important, they should be made after carrying out a thorough impact assessment and in light of complementing upcoming legislation (e.g. review of the GPSD).
I would welcome the opportunity for a video call to allow me to introduce myself and Etsy more in detail, our concerns with the current discussions, and to discuss how Etsy can best contribute to your work.
CEO, Etsy, Inc.