No general monitoring
Deliberate, not a loophole.
A host owes no general duty to monitor. It owes a sharp duty to act once it actually knows.
The European digital services framework sets the terms a hosting provider works under, and the first of them is an absence. There is no general obligation on a host to monitor the information it stores, nor to seek actively for facts indicating illegal activity. That absence is deliberate. A regime that required providers to inspect everything would mean every provider reading everything, which is precisely the outcome nobody storing business data wants. So a host that tells you it monitors all customer content is describing something the law does not require and most customers would not choose.
The counterweight is knowledge. The exemption from liability for information stored at a customer's request holds only while the provider has no actual knowledge of illegal activity or content, and the moment such knowledge is obtained the provider must act expeditiously to remove it or disable access. That is where notice and action sits: a mechanism, easy to find and use, through which anyone may report content they consider illegal, and a notice that is sufficiently precise and adequately substantiated is what gives rise to the knowledge. The practical consequence is that precision matters on both sides. A vague complaint is not a notice and acting on it would be arbitrary. A precise one starts a clock that cannot be left running.
The duty owed back to the customer is the part providers most often skip, and it is the one that decides whether a host is worth dealing with. Where anything belonging to a recipient of the service is removed, disabled, demoted, suspended or otherwise restricted, a clear and specific statement of reasons must be given: what was restricted, on what ground, whether the decision followed a notice or an own-initiative check, and how to contest it. A service cut off in silence damages trust more thoroughly than any outage, because an outage is understood to be temporary and unexplained removal is not. The same instinct governs the unglamorous parts of an agreement: suspension follows the notice period, data survives until the stated retention has run, and availability is whatever a written service level agreement says rather than whatever was implied in a sales conversation.
Deliberate, not a loophole.
Vague ones are not notices.
Reasons, and a way to contest.
A free first conversation, with no obligation.