The legislation, called the Digital Services Act, would impose new transparency obligations on the companies, forcing them to provide information to regulators and outside researchers about how algorithms that control what people see on their sites work. It also creates new regulations around how companies target online ads.
The agreement solidifies a two-bill plan, which also includes the Digital Markets Act, a competition bill that would establish new rules to prevent “gatekeepers” from abusing their power to squash smaller rivals. Both bills await votes from the Parliament and policymakers from the 27 countries in the union, which are widely viewed as a formality.
“The Digital Services Act will make sure that what is illegal offline is also seen & dealt with as illegal online — not as a slogan, as reality! And always protecting freedom of expression!” tweeted Margrethe Vestager, Europe’s top digital enforcer.
The agreement followed 16 hours of negotiations that stretched into the early morning in Brussels.
Washington lawmakers have failed to pass comprehensive tech legislation despite years of promises of a crackdown on the industry as Apple, Facebook, Google and Amazon amassed power and influence for decades with minimal regulation.
That’s not been the case in the European Union, whose laws now are expected to influence the regulatory debate in the United States. Europe passed its first landmark privacy law half a decade ago.
Despite the lack of action, there has been bipartisan support building around antitrust regulation, particularly a bill to prevent tech companies from giving their own products and services advantages on their platforms over smaller rivals. Lawmakers have also introduced bipartisan bills to address children’s safety and force greater transparency of tech companies’ algorithms.
“This will basically set the gold standard for regulating online platforms for any regulator in the world,” said Mathias Vermeulen, a co-founder and policy director at the data rights agency AWO, who worked on the legislation.
Still, the consensus among Republicans and Democrats in Congress on social media content moderation is limited. Republicans largely say tech companies should take a more hands-off approach to content moderation, while Democrats have called for the companies to be more aggressive in removing hate speech, health misinformation and falsehoods about the election. There are also First Amendment limitations to regulating the companies’ content moderation practices in the United States.
Leaders from both parties have raised concerns about Europe taking the lead on regulating some of the most significant companies in the American economy.
“As the world’s leading democracy, we have to set a better example,” former president Barack Obama said in a speech on Thursday at Stanford University, where he warned about the damaging effects of misinformation on democracies. “We should be able to lead on these discussions internationally, not [be] in the rear.”
The deal on the Digital Services Act is a blow to Google, Facebook and other major tech companies, which have aggressively lobbied against some aspects of the legislation. These companies could face fines of up to 6 percent of global revenue if they break the rules.
The Digital Services Act was first proposed in 2020, but discussion about the responsibilities of tech companies to oversee their platforms have taken on greater urgency amid the war in Ukraine, as policymakers watched Russia use its social media megaphone to sow propaganda about its invasion. Major tech platforms — including YouTube, Facebook and TikTok — banned Russian state media within Europe following sanctions in the bloc.