Will the Digital Services Act Reshape U.S. Big Tech?

What CEOs Need to Know About the EU’s Digital Services Act

Global business leaders are watching closely as the European Union’s Digital Services Act (DSA) comes into force. Positioned as one of the most significant tech regulations of the decade, the DSA is reshaping how companies handle content moderation, data transparency, and user safety. Yet while the EU pushes forward, U.S. regulators are warning American firms to tread carefully—highlighting a growing tension between global compliance and national sovereignty.

For CEOs, the question isn’t just whether the DSA applies to their business, but how it could reshape global digital governance, taxation, and consumer trust.

What Is the Digital Services Act?

The DSA is a comprehensive EU law that regulates digital platforms and marketplaces, with the most stringent rules targeting “Very Large Online Platforms”—companies with more than 45 million EU users [6].

Key requirements include:

Proactive removal of illegal content such as hate speech, fraud, and terrorist material.
Transparency about algorithms and advertising practices.
Stricter protections for minors, including bans on manipulative design tactics (so-called “dark patterns”).
Independent audits and risk assessments to evaluate systemic harm.

Noncompliance can lead to fines of up to 6% of global annual revenue—a figure large enough to command the attention of Big Tech executives.

Is There a Digital Services Tax in the U.S.?

While the EU’s DSA is regulatory in nature, it often gets conflated with the concept of a Digital Services Tax (DST). Several countries, including France and the UK, impose DSTs on revenues from digital advertising and data monetization.

In the U.S., however, there is no federal digital services tax [1]. Instead, companies face a patchwork of state-level digital taxation, with over 30 states applying some form of sales or use tax on digital goods and services [9]. For multinational CEOs, this inconsistency highlights a larger strategic issue: navigating fragmented regulatory landscapes that can shift costs and compliance obligations overnight.

What’s Illegal Under the DSA?

The DSA does not create new criminal laws—it enforces existing ones in the digital realm. Under its framework, platforms must remove or limit access to:

Hate speech and terrorist propaganda.
Fraudulent consumer offerings and scams.
Coordinated disinformation campaigns.

Beyond illegal content, the DSA also targets practices deemed harmful, such as:

Algorithms that amplify harmful or misleading content.
Advertising systems that profile minors.
Interfaces designed to manipulate user choices.

For CEOs leading platforms or e-commerce companies, this means compliance isn’t just about avoiding fines—it’s about proving corporate responsibility in digital trust and safety.

The FTC’s Pushback Against the DSA

In August 2025, the U.S. Federal Trade Commission (FTC) warned American companies not to apply the DSA’s requirements in ways that might undermine U.S. law. The agency expressed concerns that adopting EU rules wholesale could erode First Amendment protections or weaken security features such as encryption.

This puts CEOs in a delicate position: comply with European regulations and risk U.S. backlash, or prioritize domestic rules and risk penalties in Europe. It underscores the new era of regulatory nationalism, where global companies may need parallel compliance strategies depending on jurisdiction.

Why This Matters for CEOs

For business leaders, the DSA is more than a compliance challenge—it’s a case study in regulatory power shifts. Three implications stand out:

Rising Compliance Costs – Global companies must invest in content moderation, auditing, and legal infrastructure.
Competitive Pressure – Smaller platforms could face disproportionate compliance costs, consolidating power among already dominant players.
Corporate Reputation – Beyond penalties, noncompliance risks consumer backlash and reputational damage.

Ultimately, the DSA sets a precedent: if the EU can enforce global standards on digital behavior, other regions may follow with their own frameworks—leaving businesses navigating a patchwork of overlapping laws.

Final Thoughts

The Digital Services Act is not just a European issue; it’s a global business challenge. For CEOs, it raises critical questions about compliance, governance, and corporate responsibility. The EU has made clear that digital accountability is non-negotiable, and U.S. regulators have made equally clear that sovereignty comes first.

Leaders who can anticipate, adapt, and strategically align with these competing pressures will be best positioned to thrive in an era where digital regulation is as important as digital innovation.

Sources

PwC – “Digital services taxes: An overview”
European Commission – “Digital Services Act: What it means for businesses”
Wired – “Big Tech Companies in the US Have Been Told Not to Apply the Digital Services Act”
Bloomberg Tax – “State Taxation of Digital Services in the U.S.”