The battle to regulate Big Tech has reached a critical moment, with the European Union’s Digital Services Act (DSA) facing newfound backlash in the United States. Enacted in 2022, the law requires tech companies to remove harmful content from their platforms, provide more transparency around their products and respect the privacy of children and minors. Crucially, these rules apply to U.S. tech companies as well — anyone operating in the EU must comply, or face steep fines — and the Trump administration isn’t happy about it.
The Digital Services Act is a law that compels tech companies to do more to curb harmful online content, uphold user privacy and offer greater transparency around their platforms. Established by the European Union in 2022, the act applies to any digital service provider operating in the EU, including Apple, Google, Meta and other U.S. tech powerhouses.
President Donald Trump has blasted EU regulations, claiming they place an undue burden on American tech companies and even threatening retaliatory tariffs against anyone who enforces them. Now, on the heels of a trade deal widely seen as a win for Trump, efforts to rein in tech giants are colliding with broader concerns about the balance of power between the U.S. and the EU — and whether their already strained trade relationship can survive this latest setback.
What Is the Digital Services Act?
The Digital Services Act is a law that aims to hold online platforms accountable for the spread of content that can be considered “illegal and harmful,” including disinformation. It applies to “online intermediaries” like content platforms, social media and app stores, with a particular emphasis on “very large online platforms and search engines.” This puts tech titans like Google, Apple, Amazon, Microsoft, Meta and X squarely in its crosshairs.
While the DSA serves as a convenient legal framework for digital service providers to follow, its main purpose is to enforce broader online rights for EU-based users, including:
The act goes hand in hand with the EU’s Digital Markets Act, which focuses on larger digital platforms it refers to as “gatekeepers.” Together, these regulations are designed to uphold the rights of internet users in the EU, ensure a competitive digital landscape free of monopolies and strengthen public oversight of online platforms.
How Does the DSA Affect U.S. Tech Companies?
Any company that wants to operate in the European Union must adhere to the DSA, placing several U.S. tech giants under the act’s supervision. This has led to the European Commission issuing various corrective steps for platforms like Facebook, Instagram, YouTube and LinkedIn:
Not only do stricter regulations force U.S. companies to jump through more legal hoops, but any violations can also lead to hefty fines. According to a 2025 report by the Computer and Communications Industry Association, American companies face $2.2 billion in compliance costs per year and up to $62.5 billion in fines and penalties per year under EU digital services regulations. Although the European Union hasn’t dealt out fines under the DSA just yet, Elon Musk’s xAI could be the first U.S.-based company to pay a steep price for failing to comply with the act.
At the same time, compliance with EU regulations isn’t so simple. The chairman of the Federal Trade Commission has warned U.S. tech companies against following the laws, claiming that doing so may put them at odds with U.S. data protection laws. While the FTC hasn’t threatened specific penalties, it has a history of coming down hard on tech companies and platforms for violating U.S. data regulations, including Amazon, Facebook, Google and Youtube.
As a result, U.S. tech companies are put in a bind: Follow the DSA and potentially pay FTC fines, or ignore the DSA and pay EU fines. If these competing regulatory demands can’t be reconciled, pulling out of Europe altogether may become the more appealing, safer option from a business perspective.
What Does the Trump Administration Think of the Act?
Needless to say, the Trump administration hasn’t taken too kindly to the Digital Services Act. President Trump has argued that the legislation targets U.S. tech companies specifically, and is nothing less than censorship, echoing claims made by Meta CEO Mark Zuckerberg. Republicans in Congress have adopted this viewpoint as well, proposing that the act challenges free speech by attempting to regulate online platforms.
The FTC’s stance on the DSA also reflects the Trump administration’s belief that it — along with the United Kingdom’s Online Safety Act and Investigatory Powers Act — would force America’s largest tech companies to weaken their encryption and privacy methods to meet demands for more transparency and oversight.
Whether these views are accurate or not, the Trump administration has taken the initiative to chip away at the DSA. In fact, U.S. Secretary of State Marco Rubio is coordinating a lobbying campaign to have the law amended or repealed, setting up a showdown with the EU that has implications for the entities’ already frayed trade relationship.
How the DSA Could Influence U.S.-EU Trade Relations
Talks surrounding the Digital Services Act have become tainted with the bitter taste of rising trade tensions. President Trump has framed EU laws as digital tariffs, claiming they discriminate against U.S. tech companies and suggesting he may enact additional sanctions in response.
This narrative of the United States falling victim to European regulations is unlikely to sit well with the European Union, considering recent trade developments. At the end of July, the EU agreed to a trade deal with the U.S. that received heavy criticism from European leaders, who believed the bloc settled for an unequal deal to avoid a trade war. Changing or entirely scrapping the DSA to appease Trump would likely erode the EU’s credibility even more.
With pressure on both sides to hold firm, fragile trade relations between the U.S. and EU are at risk of falling apart. The U.S.-EU trade deal remains incomplete, and the two parties are continuing to work on filling in the details. If President Trump makes good on his threat of imposing sanctions in response to the DSA and other EU regulations, talks could break down as the U.S. and EU move closer to the brink of a full-blown trade war.
What is the purpose of the Digital Services Act?
The Digital Services Act seeks to establish greater public oversight over major tech companies. In particular, it calls on digital service providers to protect the fundamental rights of online users in the EU, limit harmful content and increase transparency around their platforms.
How does the DSA impact U.S. tech companies?
U.S. tech companies must meet all the requirements of the DSA to operate in EU countries, with violations resulting in fines and penalties. However, complying with the DSA could put companies at odds with U.S. data regulations. This can make it much harder for large, U.S.-based tech companies to thrive in European markets.
What is the Trump administration’s position on the DSA?
The Trump administration strongly opposes the DSA, with President Trump likening the act to a tariff and threatening to retaliate with additional sanctions. He and other officials in his administration have claimed the law targets U.S. tech companies, equating it with censorship and an attack on free speech.