They would also be required to run 24-7 services for users to be able to flag content and to appoint a person responsible for handling complaints.
Under the law, companies could face up to 50 million euros - or $53 million - in fines for not responding quickly to complaints of hate speech. "The biggest problem is that the social networks do not take the complaints of their own users seriously enough", he said.
Tuesday's announcement comes after a warning past year from justice minister Heiko Maas that the government would monitor how social media companies were dealing with increasing hate crime as well as with deleting illegal content on their respective platforms - and would intervene if their response was deemed inadequate.
Facebook and other web giants pledged in 2015 to examine and remove within 24 hours any hateful comments spreading online, in particular over the mass influx of migrants and refugees.
Germany is serious about policing social media for illegal content, judging by a new proposal from the country's Justice Ministry threatening huge fines for social media companies that fail to comply with orders to remove prohibited material in a variety of categories.
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The surge of One Nation was happening because voters were feeling disenfranchised and fed up with the two major political parties. Ms Hanson said the One Nation campaign was "rushed" and some disgruntled candidates had caused "havoc" during the campaign.
Maas stated: "It is now clear that we must further increase the pressure on social networks".
"We need legal regulations to make companies even more obligated to delete criminal content". Justice Minister Heiko Maas said the measures, which will become part of a bill to be adopted by German lawmakers in the coming months, would not restrict freedom of speech. We are committed to working with the government and our partners to address this societal issue.
Germany already has some of the world's toughest hate speech laws covering defamation, slander, public incitement to commit crimes and threats of violence.
It said its own tests showed a higher rate of content removal than the figures cited by the German justice ministry and that it would meet its obligations under German law.
A spokesperson for Twitter declined to comment, but referenced recent changes the company had made to crack down on abusive accounts and make it easier for users to control the type of content that they see.