Out-Law Analysis Lesedauer: 3 Min.

Recommender systems: how the Digital Services Act changes things for platforms

The EU Digital Services Act seeks to increase transparency over the way online platforms rank and display products, services, and content, by imposing rules governing the operation of so-called ‘recommender systems’.

It is just one feature of the wide-ranging legislation that came into full effect on 17 February 2024.

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For online platforms, though, the recommender system rules of the DSA bear similarity to existing obligations they face under the EU’s Platform-to-Business (P2B) Regulation, which came into force in 2020.

What is a recommender system?

As the name suggests, a recommender system generates personalised recommendations for users. For example, this might be where an online marketplace introduces products to a user that it considers they will be interested in based on other products they bought earlier on the platform. It can also be where products display higher up on product listings simply because the seller paid the platform more to rank the product higher. Platforms use these systems to enhance the user experience on their platform by optimising the information that the user receives.

How the DSA and P2B Regulation overlap

Article 27 of the DSA sets out rules in respect of recommender systems. There is some overlap between those rules and rules on rankings set out in Article 5 of the P2B Regulation: both aim to enhance transparency over how recommender systems operate and require platforms to make related disclosures in their terms and conditions. The DSA’s recommender system rules are designed to protect the recipients of the service – predominantly consumers, though business users too – while the P2B’s ranking rules were created purely to protect the interest of the business user.

Specifically, Article 27 of the DSA requires providers of online platforms that use recommender systems to explain, “in plain and intelligible language, the main parameters used in their recommender systems, as well as any options for the recipients of the service to modify or influence those main parameters”, in their terms and conditions.

In addition, where there are several options for users to modify or influence the parameters that have an influence on the order information is presented to them, the providers must “make available a functionality that allows the recipient of the service to select and to modify at any time their preferred option” – and ensure that functionality is “directly and easily accessible from the specific section of the online platform’s online interface where the information is being prioritised”.

Originally, it was only envisaged that ‘very large online platforms’ (VLOPs) would need to implement the option to modify parameters on their interface, but criticism by a committee of MEPs led to the obligation being extended to other intermediaries that do not fall into the category of VLOPs under the DSA.

The purpose of Article 27 of the DSA is to enable recipients to understand how certain information is prioritised for them and how their online behaviour influences the recommendation of certain products, services, or content. There is a paradox, however, between the transparency objective the article pursues and the fact that users commonly skim or even skip online terms and conditions, which can be long and sometimes difficult to understand.

The purpose of the ranking rules in the P2B regulation is a bit different.

Whereas the DSA refers to the explanation of how personalised recommendations to suggest products or services are generated based on online user behaviour, the P2B refers to the algorithms used by online platforms to determine the visibility and prominence of goods or services offered by the business users.
Instead of the online user behaviour, the P2B focuses more on the ranking of goods or services by, for example, visual highlights, reviews/ratings and renumeration. This makes sense from a business user protection view, because the goal of Article 5 is to improve the predictability for business users, allowing them to better understand the function of the recommender system and enabling them to compare these systems with other online platforms. This way, a business user can choose which online platform it wishes to offer its products or services on. If business users understand how products or services are ranked, they have the opportunity improve how their own products or services are presented and benefit commercially, in turn.

Just as under the DSA, the P2B rules require platforms to include an explanation in their terms and conditions on how business users can actively influence ranking. However, this only relates to how business users might influence ranking by renumeration and does not extend to an equivalent right to that under the DSA to adjust online preferences.

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