The European Commission is looking to force social media giants, such as Facebook, Google and Twitter, to change their terms of service for European users.
The warning was made today by European Commission official, who told Reuters that if the companies don't agree to the change in their terms and conditions then they could be fined.
The Commission sent letters to the companies in December, which explained how their service terms did not comply with EU consumer protection laws, and that more needed to be done to tackle fraud and scams perpetrated via their websites.
In the letters seen by Reuters, the terms that the authorities want to change include only allow users to seek compensation in a Californian court because the tech companies are based there, instead of their country of residence.
The authorities also want social media companies to flag sponsored content clearly, and ensure that mandatory rights, such as the right to cancel a contract, are not waived. They also want the companies to do more to determine the suitability of content generated by users - to censor particular content, in other words.
The official said that the Commission, alongside European consumer protection authorities would "take action to make sure social media companies comply with EU consumer rules".
Earlier this week, the German government said it would fine the likes of Facebook and Twitter up to €50m if they fail to remove slanderous or threatening posts that go up on the social network within 24 hours.
The new bill, which is still in draft, was introduced by justice minister Heiko Mass on Tuesday. It will cover defamation, slander, public prosecution, crimes and threats, and is designed to fight off hate crime and criminal offences on social networks more effectively.
"There must be as little space for criminal incitement and slander on social networks as on the streets," Mass said, emphasising that social media companies were currently not doing enough to tackle a growing issue.
"Too few criminal comments are deleted and they are not erased quickly enough," he added. "The biggest problem is that networks do not take the complaints of their own users seriously enough…it is now clear that we must increase the pressure on social networks.
"We need legal regulations to make companies even more obligated to delete criminal content," he said.
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