Chapter 3|Due Diligence Obligations - Online Platforms|📖 5 min read
1. Section 3 of this Chapter, with the exception of Article 24(3), shall not apply to providers of online platforms that qualify as micro or small enterprises as defined in the Commission Recommendation 2003/361/EC. Section 3 shall also not apply to providers that previously qualified as micro or small enterprises during a period of 12 months after they have ceased to qualify as such, except when they are very large online platforms in accordance with Article 33.
2. By derogation from paragraph 1, Section 3 shall apply to providers that qualify as very large online platforms pursuant to Article 33, irrespective of whether they qualify as micro or small enterprises.
Understanding This Article
Article 19 is the DSA's proportionality provision for online platforms, recognizing that imposing the same obligations on a startup with 10 employees as on Facebook would be economically destructive and innovation-killing. The article exempts micro and small enterprises from most platform-specific obligations in Section 3 (Articles 20-28), which include internal complaint systems, out-of-court dispute resolution, trusted flaggers, and various transparency requirements.
The SME definition comes from Commission Recommendation 2003/361/EC: micro enterprises have fewer than 10 employees and less than €2 million annual turnover or balance sheet; small enterprises have fewer than 50 employees and less than €10 million annual turnover or balance sheet. These thresholds are deliberately generous to protect genuinely small operators.
Critically, paragraph 1 includes a 12-month grace period. When a small platform grows beyond SME thresholds - a success story - they don't immediately face full compliance obligations. The 12-month buffer gives them time to build compliance capabilities, hire staff, implement systems, and prepare for regulatory requirements without sudden operational shock.
However, the exemption categorically doesn't apply to Very Large Online Platforms (VLOPs) - platforms with 45+ million monthly active EU users. No matter how small a company's formal structure, if it operates a VLOP, it faces full obligations. This prevents large platforms from avoiding responsibilities through corporate structuring.
One obligation survives the exemption: Article 24(3) transparency reporting about user numbers. Even tiny platforms must report their active recipient numbers to Digital Services Coordinators. This is essential for determining whether platforms reach VLOP thresholds and for regulatory oversight.
The exemption is automatic - platforms don't apply for it. If they meet SME criteria, they're exempt. If they grow beyond criteria, they have 12 months before Section 3 obligations activate (unless they become VLOPs, which triggers immediate obligations).
Key Points
Micro and small enterprises (fewer than 50 employees, less than €10M turnover) exempt from Section 3 obligations
Exemption continues for 12 months after growing beyond SME thresholds
Exemption NEVER applies to VLOPs regardless of enterprise size
Article 24(3) transparency reporting still required even for small platforms
Reduces compliance costs for startups and small platforms
Enables innovation and competition without excessive regulatory burden
Balances consumer protection with proportionate regulation
Practical Application
For Startup Platforms: A new social network with 20 employees and €3 million revenue qualifies as a small enterprise. They're exempt from implementing internal complaint systems (Article 20), participating in out-of-court dispute resolution (Article 21), managing trusted flagger programs (Article 22), and other Section 3 requirements. They still must comply with hosting service obligations (Articles 16-17 notice-and-action, statement of reasons) and basic intermediary obligations (contact points, terms and conditions), but avoid the more burdensome platform-specific requirements.
For Growing Platforms: A platform with 35 employees and €8 million revenue is exempt as a small enterprise. They grow to 60 employees and €15 million revenue, exceeding thresholds. Article 19 gives them 12 months to prepare for Section 3 compliance - time to build internal complaint systems, establish out-of-court mechanisms, develop additional transparency reporting, and hire compliance personnel. After 12 months, full obligations apply.
For VLOPs: A platform structured as a small company but with 50 million monthly EU users is designated as a VLOP under Article 33. Despite technically qualifying as a small enterprise, Article 19(2) makes the exemption inapplicable - they face ALL DSA obligations including Section 3 requirements, Section 5 VLOP-specific obligations (risk assessments, audits, etc.), and complete compliance burden. The exemption protects genuinely small operations, not large-scale platforms hiding behind small corporate structures.
For Niche Platforms: A specialized forum for hobbyists with 5 employees, €500K revenue, and 50,000 users qualifies as micro enterprise. They're exempt from Section 3 obligations indefinitely as long as they remain below thresholds. This enables niche communities to operate without disproportionate compliance costs while still maintaining basic protections (notice-and-action, content moderation transparency).
For Transparency Reporting: Even micro platforms must report active user numbers per Article 24(3). If a small forum has 25,000 monthly active users, they must report this to their Digital Services Coordinator. This limited reporting burden is manageable even for tiny teams while enabling regulators to monitor platform landscape and identify potential VLOP designations.
For European Startups: A French startup creating a new content-sharing platform with 12 employees competes with established giants like Instagram. Article 19 levels the playing field somewhat - the startup faces lighter compliance burden initially, enabling focus on product development and user growth without immediate need for extensive compliance teams. As they grow successful, the 12-month transition period helps them scale compliance capabilities.
For Marketplace Platforms: A small e-commerce marketplace with 30 employees and €6 million revenue selling artisan goods is exempt from Section 3 obligations. However, they still face Section 4 marketplace-specific obligations (Articles 29-32 - trader verification, etc.) which apply to ALL marketplaces regardless of size. Article 19 only exempts Section 3 (general platform obligations), not other applicable sections.
For User Impact: Users on small exempt platforms don't have access to internal complaint systems or out-of-court dispute settlement. If content is wrongly removed, they can't appeal through Article 20 mechanisms. However, they still have Article 17 statement of reasons explaining decisions, Article 16 ability to report illegal content, and access to judicial remedies (Article 53). The exemption reduces procedural protections but maintains core rights.
For Competitive Advantage: Small platforms might promote their 'lighter regulation' as competitive advantage - faster decision-making, less bureaucracy, more direct user engagement. Conversely, large platforms might argue their compliance infrastructure provides better protections. Users can choose based on preferences - regulatory protections vs operational flexibility.
For Transition Planning: When a platform approaches SME thresholds, they should proactively prepare for Section 3 compliance rather than waiting until the 12-month grace period begins. Building compliant systems takes time - internal complaint mechanisms, dispute resolution partnerships, transparency reporting capabilities, trusted flagger management. Smart platforms start building these before they legally must.