Khaberni - The European Union enacted a new law on Thursday, holding social media platform companies like Meta and TikTok responsible for financial fraud, significantly ramping up the Union's efforts to curb the power of big tech companies.
After hours of negotiations that lasted into the late night, European Union lawmakers approved this measure, thereby adding another layer of regulatory pressure on companies that have spent years lobbying in Washington to counter the European Union's strict anti-monopoly and content regulation agenda.
This law is based on the European Union's Digital Services Act and Digital Markets Act, which limit the spread of illegal content and prevent massive tech companies, such as Google, Amazon, and Meta, from exploiting their dominance to expand online, according to a report by "Mashable," a site specialized in technology news, reviewed by "Al Arabiya Business".
Violations of either law could lead to hefty fines, a measure that has been repeatedly opposed by the tech sector and U.S. President Donald Trump. Trump accused the European Union of "discriminating" against American companies and described the EU's law enforcement as an attack on American innovation.
Most of the final discussions focused on determining who is responsible when these fraud incidents occur. Many members of the European Parliament argued that big tech companies and banks share equal responsibility, as platforms host the fraud and banks handle the money transfers. However, European governments opposed this view, arguing that banks should only be accountable when their preventive measures fail.
The result was a compromise solution; banks will compensate victims when a fraudster impersonates a bank or when a financial transaction occurs without the client's consent, according to a statement from the European Union.
The new fraud liability rules come at a time when social media platforms have become the main target for investment fraud schemes, identity theft, and dubious advertisements of various types.
Under the law, platforms will now be required to compensate banks when a user is defrauded, and it is evident that the company failed to eliminate the fraud that was reported.
