Meta Platforms Inc. (NASDAQ: META) and TikTok’s parent company ByteDance (NYSE: BDD) have recently come under fresh scrutiny by the European Commission over accusations that they failed to meet transparency and content policing obligations required by the EU’s Digital Services Act (DSA). This development is part of a broader pattern of increasing regulatory pressure on U.S. tech firms operating in Europe, revealing deeper tensions in transatlantic digital policy that go beyond individual cases.
The Digital Services Act, which came into force over the past few years, aims to make online platforms more accountable for harmful and illegal content and transparent about their content moderation policies. The EU’s regulatory framework places significant compliance demands on major digital platforms, requiring them to provide researchers with adequate access to data and uphold mechanisms for effective content removal and user appeals. According to preliminary findings disclosed by the European Commission, Meta and TikTok have breached these transparency rules, notably in providing access to researchers and in how they process reports of illegal content. While neither company has been formally fined yet, they face potential penalties as high as 6% of their global annual revenue, a figure that could equal billions of dollars given Meta’s and ByteDance’s scale.
Meta’s situation reflects ongoing concerns raised by European regulators about how the company handles harmful content on Facebook. Reports highlight challenges users face in navigating content reporting systems, which Europeans describe as overly complex or discouraging. There are also allegations that Meta uses “dark patterns” that nudge users away from reporting or following up on complaints about illegal posts. These shortcomings have led to accusations that the company is not fulfilling its obligations under the DSA to police the platform effectively and transparently.
This regulatory scrutiny is occurring amid a wider backdrop of tensions between the EU and U.S. technology giants. The Digital Services Act is one of several pieces of legislation, including the Digital Markets Act (DMA) and the General Data Protection Regulation (GDPR), through which the EU has sought to impose strict rules on large tech firms, most of which are U.S.-headquartered. These laws set high compliance thresholds that disproportionately impact American companies due to their size and market dominance in Europe. EU policymakers argue these rules protect consumers and foster fair competition, but critics, including officials from the U.S. government, see them as targeted and protectionist measures that impose significant costs and operational challenges on U.S. firms.
The EU’s approach has caused diplomatic friction. The current U.S. administration, similar to its predecessor, has voiced concerns that these regulations unfairly discriminate against U.S. companies by creating regulatory burdens that European competitors do not face to the same extent. There have been suggestions from Washington of retaliatory tariffs or sanctions if the European regulatory stance persists, framing the contested digital regulations as a form of economic barrier analogous to traditional trade tariffs.
Meta is not alone in facing this pushback. TikTok, owned by Chinese company ByteDance, has also been cited by the European Commission for similar failures to comply with transparency requirements. This suggests the EU’s regulatory enforcement is not limited to U.S. tech firms but is part of a broader effort to control how all major social media platforms operate within its borders. Still, the scale and focus on American firms are notable given their outsized presence online and the political weight of U.S.-EU trade relations.
The evolving regulatory environment demands that these tech giants not only enhance content moderation practices but also improve transparency about those efforts and make compliance more accessible to external scrutiny. The consequences for failing to meet these requirements are substantial; besides potential fines, companies face reputational risks and heightened operational uncertainty in one of their largest markets.
Looking ahead, the situation is a clear example of how digital regulation increasingly functions not just as a consumer protection mechanism but as a significant trade and geopolitical issue. U.S. technology companies must navigate a complex web of oversight regimes that reflect growing national and regional interests in controlling digital ecosystems. Meanwhile, the EU appears committed to enforcing these rules robustly as it seeks to assert digital sovereignty and regulatory influence on the global stage.
The ongoing scrutiny of Meta and TikTok highlights the challenges multinational tech firms face balancing innovation, global market access, regulatory compliance, and political considerations in an era where digital policy is as contentious and consequential as traditional trade disputes.
