Facebook said earlier this year it was hiring hundreds of extra employees to increase moderation and delete questionable posts, but commissioner for the digital economy and society Mariya Gabriel has not been convinced.
The intervention follows calls led by prime minister Theresa May at the UN General Assembly in NY for internet companies to use technology that will allow them to remove terrorist propaganda from the internet within two hours. "Today we provide a clear signal to platforms to act more responsibly".
The Commission also wants companies to do a better job of preventing illegal content from reappearing.
It said it wants the companies to invest more in detecting of hate speech and work with trusted reviewers who were trained to know what constitutes hate speech.
It also calls on technology companies to publish transparency reports detailing the number and types of notices they have received about illegal content.
The EC's move comes amid growing political pressure for tech companies to abandon their position as natural carriers of information and take responsibility for the material they publish.
The European Union has handed Facebook, Twitter and other social media companies an ultimatum to rid their platforms of hate speech or face legal consequences.
In May a year ago, some of the social media platforms promised a review of majority of the hate speech flagged by users within 24 hours and remove any illegal content.
The European Commission, EU's top regulator, said the social media firms are still failing to act fast enough.
Executives of the major internet companies, Europol, the EU Counter Terrorism Co-ordinator and the European Parliament have been working voluntarily to counter terrorist propaganda and hate speech online through the EU internet forum since December 2015.
She added that hate speech "can lead to concrete violence against concrete people in real life and we must not tolerate it".