The EU wants to force companies to remove content that is considered illegal in the country where it is viewed, which could be Holocaust denials in Germany or racist postings in France.
It would also significantly shape how companies interact with users, allowing Europeans to opt-out of targeted advertising more easily and prohibiting companies from targeting advertisements at children.
The legislation would also ban companies from employing deceptive tactics known as dark patterns to lure users to sign up or pay for services and products. And it would allow users to ask companies which personal characteristics, such as age or other demographic information, led them to be targeted with certain advertisements.
The two legislation bodies of the 27-nation bloc "are expected to debate the contents of the legislation for months before voting on a final version."
A vote on "initial approval" of the legislation passed "overwhelmingly."
Christel Schaldemose, the centre-left lawmaker from Denmark who has led negotiations on the bill said that the Digital Services Act will take a stand against the Wild West the digital world has turned into, set the rules in the interests of consumers and users, not just of Big Tech companies and finally make the things that are illegal offline illegal online too.
It looks like the law will get through Open Access Government reports there were 530 votes for the legislation, and just 78 against (with 80 abstentions).
Word on the street is that the Act could now become the new gold standard for digital regulation, not just in Europe but worldwide.
It will mean that algorithm use should be more transparent, and researchers should also be given access to raw data to understand how online harms evolve. There is also a clause for an oversight structure, which would allow EU countries to essentially regulate regulation. Violations could in future be punished with fines of up to 6 per cent of a company's annual revenue.
The draft Bill is one half of a dual-digital regulation package. The other policy is the Digital Markets Act (DMA), which would largely look at tackling online monopolies.