ChatGPT Facing Dual Regulatory Regimes Under New EU Designation

The European Union has classified OpenAI's ChatGPT as a Very Large Online Search Engine (VLOSE) under the Digital Services Act (DSA), signifying Brussels is increasingly treating influential AI services as both AI models and mass-market information platforms. This designation follows similar designations for Reddit and Roblox as Very Large Online Platforms (VLOPs).

The move comes with the goal of placing the three services under direct Commission oversight, requiring them to comply with risk-management, auditing, and transparency obligations by January 2027. While OpenAI already faces AI Act obligations, the DSA designation introduces a new layer of EU oversight for ChatGPT as a service through which millions in Europe seek and receive information.

The Commission is demonstrating its ability to apply platform-governance laws to emerging AI services without waiting for specific legislation. This decision highlights the difficulties in applying DSA concepts, such as illegal content, recommender systems, and information ranking, to dynamically generated answers. ChatGPT's required systemic-risk assessment must address issues like hallucinations, fabricated citations, election misinformation, harmful advice, mental health interactions, and risks to minors.

The designation is not a finding of law violations, but it moves the companies into the DSA's highest supervisory tier, where they must identify and mitigate systemic risks. OpenAI may need to coordinate model testing, content safeguards, and compliance documentation across both the AI Act and DSA, potentially requiring revised contract provisions, additional logging and monitoring, and stronger safeguards.

Companies deploying their own conversational services should also consider whether their platforms perform search, information-discovery, or intermediary functions covered by the DSA.