The new law gives companies 24 hours to remove posts that violate German law and have been flagged by users. This includes holocaust denial content and incitements of hatred.
The companies are given up to seven days to remove content that is flagged as offensive, but might not directly break German law.
Fines will be imposed if companies systematically fail to follow the new law.
Although social media companies pledged action against flagged content in 2015, the German government said that not enough had been done. Although Facebook was removing 39% of flagged content and YouTube 90%, Twitter only removed 1% of content flagged by users.
"Freedom of opinion ends where criminal law begins… The online platforms are not taking adequate action. Our experience has clearly shown that without political pressure, the social networks will unfortunately not budge."
Source: The Local, Germany