Technology companies serving US markets are facing a converging set of obligations across algorithmic accountability, software liability, and digital services transparency. Federal and state-level developments are advancing simultaneously. Companies that delay compliance review risk enforcement exposure, contractual disputes, and reputational harm that may be difficult to reverse.
The United States has accelerated regulatory activity targeting digital services, imposing new transparency, accountability, and liability requirements on technology companies operating across its markets. Affected businesses – including those incorporated as a Delaware LLC (a limited liability company formed under Delaware corporate legislation) or as foreign entities with US users – must assess their exposure promptly. Compliance timelines vary by regulatory instrument and state, but a significant share of requirements are already effective or enter force within the next six to twelve months.
This alert outlines what has changed, which business categories are affected, and the immediate steps international companies should take to manage their position under US technology and digital services legislation.
What has changed: the regulatory developments and their effective dates
The US regulatory environment for digital services has shifted across three distinct but overlapping tracks.
Federal algorithmic accountability measures. Federal legislative and regulatory attention has focused on algorithmic accountability and automated decision-making in high-stakes contexts. Requirements now extend to companies deploying automated systems that affect consumers in areas such as credit, employment screening, housing, and healthcare. Regulators have signalled active enforcement. The US District Court system is seeing an increasing volume of claims grounded in software liability and discriminatory algorithmic output. Practitioners advising technology companies note that the absence of documented human oversight is frequently cited as an aggravating factor in enforcement proceedings.
State-level digital services legislation. Several states have enacted or expanded digital services laws covering minors' online safety, data broker registration, and platform transparency. These instruments carry independent compliance obligations. A technology company with users in multiple states must assess each state's threshold criteria separately. Failure to do so is a common error among international entrants.
SEC disclosure requirements for technology companies. The Securities and Exchange Commission (SEC) has expanded disclosure expectations for listed technology companies regarding material cybersecurity incidents and AI-related risks. These requirements now apply within defined reporting windows following a qualifying incident. Non-listed foreign companies with US capital market exposure should also assess whether these obligations affect their reporting obligations indirectly.
For companies active in both the US and EU markets, practitioners note the growing divergence between US and EU approaches. The EU's AI Act compliance regime imposes risk-based obligations that differ structurally from the US sector-specific model. Companies managing both regimes should map obligations separately to avoid assuming that EU compliance satisfies US requirements – or vice versa.
For detailed guidance on managing the AI and technology law obligations that apply to your US operations, Ferraz & Whitmore's practice team is available for a preliminary review.
Who is affected: business categories and threshold criteria
The new requirements apply broadly, but their intensity varies by business category and scale. The following categories face the highest immediate compliance exposure.
Platforms with significant US user bases. Digital platforms – including social media, marketplace, and content distribution services – face transparency and algorithmic disclosure obligations once they meet defined user-volume thresholds. Thresholds differ between federal and state instruments. A platform that falls below the federal threshold may still meet state-level criteria in high-population states.
AI and automated decision-making systems. Any company deploying automated systems that generate consequential decisions affecting US individuals – in lending, employment, tenancy, or public services – is within scope. This includes offshore providers whose systems produce output consumed in the US. The fact that the system operator is incorporated outside the US does not remove the obligation. Algorithmic accountability requirements extend to the point of effect, not the point of incorporation.
Software and SaaS providers. Software liability exposure has grown materially. Legislative developments are expanding the circumstances under which software providers may bear direct liability for defects that cause harm to end users or third parties. Technology licensing agreements that previously allocated all risk to the licensee are being scrutinised more carefully by courts. Companies relying on contractual disclaimers as their primary defence should obtain updated legal assessments of whether those disclaimers remain enforceable under current US law.
Foreign companies with US nexus. International businesses – whether structured as a Delaware LLC, a foreign corporation with a US branch, or a purely offshore entity serving US customers – must assess their exposure. US courts, including federal courts sitting in technology-dense jurisdictions, have consistently applied US regulatory requirements to foreign-incorporated entities whose conduct produces effects within the United States. Engaging a lawyer with United States cross-border experience is the most reliable first step for international companies assessing their position.
Dispute resolution clauses in technology contracts are also under scrutiny. JAMS and AAA arbitration provisions. referring to the arbitral rules of the Judicial Arbitration and Mediation Services and the American Arbitration Association respectively. remain widely used and enforceable. However. Their scope relative to new statutory claims requires review. Some regulatory claims may not be arbitrable under applicable law.
Companies with overlapping US and international intellectual property exposure should also review our analysis of intellectual property protection strategies for the United States market.
To receive an expert assessment of your company's exposure under US digital services legislation, contact us at info@ferrazwhitmore.com.
What to do now: immediate actions for international companies
The following actions are relevant for any international technology company with US market exposure. They should be initiated without delay.
- Map your US user base and product footprint against federal and state threshold criteria. Determine which instruments apply and whether you are already in a compliance period.
- Audit your automated decision-making systems for algorithmic accountability compliance. Document human oversight mechanisms and prepare the records that regulators and US District Court proceedings may require.
- Review your technology licensing and software agreements for software liability allocation. Assess whether existing disclaimers and indemnities remain enforceable and adequate under the current legislative regime.
- Assess your dispute resolution clauses in US-governed contracts. Verify that JAMS or AAA arbitration provisions cover the categories of claim now arising from digital services and AI legislation.
- Check SEC disclosure obligations if your company is listed or has US capital market exposure. Material cybersecurity incidents and AI-related risk factors may require disclosure on timelines that do not accommodate lengthy internal review processes.
For companies that have not yet completed a baseline US technology law compliance review, delay compounds risk. Regulators in this space are actively bringing enforcement proceedings. Courts are receiving claims grounded in software liability and algorithmic discrimination with increasing frequency. The cost of remediation after an enforcement action or litigation commences is materially higher than the cost of proactive compliance review.
To discuss how US digital services regulation affects your business specifically, reach out to info@ferrazwhitmore.com for a preliminary consultation.
International companies navigating parallel regimes. including the EU AI Act compliance requirements alongside US obligations. may also find relevant context in our alert on digital services regulatory developments in Brazil. This addresses comparable cross-border compliance challenges in a civil law environment.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising technology companies, institutional investors, and in-house legal teams on AI and technology law, digital services regulation, and cross-border compliance across 46 jurisdictions. As a law firm serving United States and international markets, we combine Portuguese civil law expertise with English common law tradition to deliver practical, results-oriented counsel. Our technology law practice includes practitioners with experience before US federal courts and international arbitral bodies including JAMS and AAA arbitration forums. The firm's Lisbon base provides direct access to EU regulatory structures, while our common law expertise supports enforcement and dispute strategies in the United States and English-speaking jurisdictions. To discuss how the new US digital services requirements apply to your operations, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.