Sanchez also said he would propose at a European Union Council meeting to end anonymity on social media, including by linking users' data to a common EU identity wallet, and by making algorithms more transparent.
"The owner of a small restaurant is responsible if their food poisons customers; social media tycoons should be held responsible if their algorithms poison our society," he said.
"Let's take back control. Let's make social media great again," he added, mimicking the campaign slogan of US President Donald Trump.
Sanchez said while social media had brought plenty of benefits, such as connecting people, they also came with "huge downsides hidden in the bowels of the algorithms like invaders concealed in the belly of the Trojan horse".
Social media algorithms use data and rules to determine what content to show users.
Attempts to bring social media to account have been risible so far, according to Sanchez.
He cited the largest fine meted out to a social media company in the EU to date of just 0.6 per cent of its annual profit, and called for harsher fines.
He did not name the company.
One of a dwindling band of centre-left European leaders, Sanchez has become increasingly vocal in his criticism of social media barons in recent weeks, referring to them as a "techno-caste" and echoing comments by former US president Joe Biden of an oligarchy and "tech-industrial complex" threatening democracy.
