The Framework

The National Communications Commission’s 2022 Digital Intermediary Services Act (DISA) classifies every online service into five tiers—mere conduit, caching, hosting, online platform, and “designated online platform”—and extends the law extraterritorially to any provider with a “substantial connection” to Taiwan, even without a local office.[1] Operators must appoint a local agent, publish detailed content-moderation rules (including any automated tools), file annual transparency reports, comply with court takedown orders, and provide user data to authorities.^[2] Once a platform exceeds 2.3 million local active users (roughly 10 percent of Taiwan’s population), it is designated and must (1) disclose recommender-system parameters; (2) run yearly systemic-risk assessments; (3) undergo independent audits; and (4) offer user-accessible appeals and third-party dispute resolution. Noncompliance triggers fines of NT$1 million–NT$10 million (≈ US$34,000–US$337,000) per breach, repeatable until rectified, and the NCC may ultimately block service.^[3] Although public backlash has paused the bill, officials have not withdrawn it, leaving the requirements latent.^[4]

Implications for U.S. Technology Leadership

The 2.3-million-user trigger automatically sweeps in U.S. services such as YouTube, Facebook, Instagram, and X while exempting most domestic or regional competitors below the threshold. These firms would have to divert engineering staff and legal budgets toward continuous algorithmic documentation, annual audits, and Taiwan-specific complaint handling—resources that would otherwise fund product localization, R&D, or AI model improvements. The mandatory disclosure of recommender parameters and advertising logic also risks exposing proprietary methods to rivals, undermining U.S. companies’ hard-won advantages in personalization and ad targeting.

DISA’s extraterritorial “substantial connection” clause forces U.S. platforms with no local office to build bespoke compliance pipes or exit the market, fragmenting their regional operations and raising fixed costs. Because the draft mirrors the EU Digital Services Act yet layers on Taiwan-specific risk assessments, it compounds the global patchwork of content rules that large U.S. firms must navigate while smaller or state-backed foreign platforms can scale under lighter regimes. The cumulative effect systematically disadvantages U.S. technology companies, weakens their ability to offer unified services across Asia, and diverts capital away from innovation that underpins American technological leadership.

Endnotes