Snap Inc. stock traded lower in premarket activity on Thursday, slipping 1.6% after EU authorities announced a formal inquiry into Snapchat's measures to protect child users. The European Commission said it has opened the probe under the Digital Services Act (DSA), the bloc's regulatory framework that requires large online platforms to put in place stronger protections against illegal and harmful content or face significant penalties.
The Commission signaled concerns that Snapchat may not have adequate safeguards to stop children from being contacted by people seeking to exploit them - either sexually or for criminal purposes. Officials also flagged potential weaknesses in moderation tools that appear unable to prevent the transmission of information that would steer users toward illegal goods, including drugs, and age-restricted products such as vapes and alcohol.
"From grooming and exposure to illegal products to account settings that undermine minors’ safety, Snapchat appears to have overlooked that the Digital Services Act demands high safety standards for all users," EU technology chief Henna Virkkunen said in a statement.
The inquiry is being carried out using the mechanisms of the DSA, which gives regulators the authority to require platforms to strengthen safeguards for users and to impose fines of up to 6% of a company's global annual turnover for noncompliance. The Commission noted it suspects Snapchat lacks sufficient measures to prevent illicit contacts with minors and to stop the spread of material that facilitates access to illegal or age-restricted products.
As part of the new action, the European Commission announced it will assume responsibility for a Dutch regulatory investigation that was opened last September into reported sales of vapes to children on Snapchat. Taking over that case brings the matter directly under the Commission's DSA-led scrutiny.
The launch of this probe is the latest regulatory development facing social media firms doing business in Europe under the DSA, which enforces tighter obligations on content moderation and user safety for large online platforms. Market reaction to the announcement was modest in early trading, with Snap shares posting the 1.6% premarket decline reported by exchanges.
Note: The article reflects the statements and actions described by the European Commission and the quoted EU official. It does not add or infer facts beyond those presented by the Commission's announcement.