Europe’s DSA Puts an Unfair Target on American Tech Companies

In 2023, the European Union (EU) introduced the Digital Services Act (DSA), a law aimed at strengthening online safety and protecting users across digital platforms. The law has become increasingly controversial for its impact on online free speech, including censorship of users outside of the EU, but equally important is the fact that the DSA disproportionately targets American services while applying less onerous rules to EU ones, creating an unfair regulatory environment for American tech companies. 

Under the DSA, the European Commission designates online services with more than 45 million monthly users in the EU as Very Large Online Platforms (VLOPs) or Very Large Online Search Engines (VLOSEs). These designated online services then face Europe’s most stringent regulatory requirements and scrutiny. However, the majority of VLOPs and VLOSEs are based in the United States. As a result, U.S. technology firms disproportionately face significant compliance costs and increased financial exposure from potential fines and penalties compared to their European counterparts.

The DSA’s threshold appears deliberately calibrated to target American platforms. In April 2023, shortly after the introduction of the DSA, the EU designated 17 services as VLOPs and two as VLOSEs. Of these, 16 services were American owned, two belonged to Chinese firms, and one belonged to a European company. Therefore, at its inception, only about 5 percent of the services covered by the DSA’s strictest rules were European.

Since then, the EU has expanded its VLOP and VLOSE designations by continuing to add major U.S. platforms to the list. Most recently, in January 2026, the EU added WhatsApp, owned and operated by Meta. Now, because the EU has designated only a handful of European-owned pornography sites and one European service that is not pornographic as VLOPs, nearly 70 percent of all VLOP and VLOSE designations apply to U.S. firms, subjecting them to the DSA’s extensive and costly obligations related to content moderation, risk assessment, and independent audits. 

These obligations, combined with fines that can reach up to an absurdly high 6 percent of a firm’s total global revenue, create a regulatory burden that is primarily punitive and discriminatory. European firms, which typically have smaller number of monthly users, largely fall outside the DSA’s enforcement, while large U.S. companies must contend with these rules. By exempting smaller platforms and imposing disproportionate obligations on foreign firms, the DSA functions as a non-tariff regulatory attack in the Internet regulation landscape and contributes to a two-tiered digital ecosystem that disadvantages non-European firms.

As key drivers of American innovation and global competitiveness, U.S. tech firms play a critical role in domestic economic strength and national security. The financial burdens imposed by EU digital regulations risk constraining revenue streams and limiting these firms’ capacity to invest in innovation. Over time, such pressures will serve to weaken the innovation ecosystems that U.S. technology companies have historically led and sustained.

The problem is further compounded as other countries begin adopting similarly structured regulations. Discriminatory practices risk becoming normalized, with nations seeking to appear compliant with Europe’s rules. Argentina, Brazil, South Korea, and India have all started implementing DSA-style digital regulations, signaling momentum and tacit endorsement of such frameworks across different regions, a development that poses a growing challenge for U.S. companies. The imposition of hefty fines could also prompt American firms to retreat from these markets, leaving China to fill the vacuum created by their withdrawal. As strategic competition between the United States and China intensifies, this trend is both concerning and potentially destabilizing for American technological influence globally.

By holding leading U.S. companies to a higher regulatory standard than their own firms, the EU has set a precedent that could reshape how major digital platforms operate worldwide. The treatment of VLOPs and VLOSEs under the DSA highlights the growing tension between the EU’s regulatory ambitions and the interests of American technology firms. In this evolving digital landscape, U.S. policymakers should more proactively resist these types of policies by raising them directly and systematically in trade negotiations, where regulatory discrimination against foreign firms can be addressed as a non-tariff attack. Trade negotiations provide a practical and credible forum for linking digital regulation to broader economic commitments, giving the United States leverage to achieve these changes. Unless U.S. policymakers make clear to foreign policymakers that the United States will not tolerate this type of unfair treatment of their firms, countries will continue to adopt and implement DSA-like laws. Moreover, without engagement, the U.S. risks ceding influence over the laws and norms governing digital platforms, including on transparency, safety, and content moderation. Such engagement is therefore both instrumental and critical for U.S national interests including digital innovation, global competitiveness, and technological leadership.

Ultimately, the objective for U.S. policymakers is to secure a digital regulatory environment in Europe that does not condition market access on nationality and that calibrates compliance obligations to demonstrable risk rather than firm origin. Achieving greater parity in the treatment of large platforms, through more proportionate obligations, restrained use of global-revenue fines, and clearer enforcement standards, would reduce regulatory discrimination against U.S. firms and the harmful consequences for them from EU law.