Meta and TikTok successfully challenged the way European Union regulators calculated a supervisory fee imposed on them under the bloc’s Digital Services Act (DSA).
The DSA compels very large online platforms, defined as those with more than 45 million users in the EU, to do more to tackle illegal and harmful content on their sites or risk fines of up to 6 percent of their annual global turnover.
Meta, which owns Facebook and Instagram, and TikTok—owned by Chinese company ByteDance—sued the European Commission (EC), the EU’s executive branch, after they were handed a supervisory fee of 0.05 percent of their annual worldwide net income to cover the commission’s costs of monitoring their compliance with the DSA.
The size of the fee, which is paid annually, is linked to the number of average monthly active users each company has and whether the companies in question post a profit or loss in the previous financial year.
TikTok and Meta argued that the methodology used to calculate their fees was flawed, resulting in disproportionately high fees being levied.
The General Court of the EU, based in Luxembourg, agreed with Meta and TikTok, giving regulators a year to fix their methodology with a new act and annulling the system of levying the fees, but it stopped short of ordering the commission to reimburse the two tech giants.
“In order to determine the amount of the supervisory fee payable for 2023, the Commission calculated the number of average monthly active recipients of the services concerned on the basis of a common methodology based on data provided by third-party operators and annexed to each implementing decision.
“However, since that methodology is an essential and indispensable element of the determination of the supervisory fee, it should have been adopted not in the context of implementing decisions but in a delegated act, in accordance with the rules laid down in the DSA.”
“While we await the final details of the judgment, we can already say that the Court confirms our methodology is sound: no error in calculation, no suspension of any payments, no problem with the principle of the fee nor the amount,” an EC spokesperson told The Epoch Times in an emailed note.
“The Court’s ruling requires a purely formal correction on the procedure: we now have 12 months to adopt a delegated act to formalize the fee calculation and adapt new implementing decisions.”
A TikTok spokesperson said in response to the ruling, “We'll closely follow the development of the delegated act.”
A Meta spokesperson told The Epoch Times: “We welcome today’s judgment, which will force the European Commission to reassess the unfair methodology being used to calculate these DSA fees. Currently, companies that record a loss don’t have to pay, even if they have a large user base or represent a greater regulatory burden, leaving others to pay a larger and disproportionate amount of the total. We look forward to the flaws in the methodology being addressed.”
Other companies required to pay the fee include Amazon, Apple, Google, Microsoft, X, and Snapchat.
The DSA, in concert with its sister legislation, the Digital Markets Act, has made tech regulation a wedge issue between the EU and the United States.
“Rather than position their own companies and workers for success, foreign governments have been taxing the success of America’s companies and workers,” Trump wrote.
“America’s economy will not be a source of revenue for countries that have failed to cultivate economic success of their own.”
Silicon Valley giants have frequently been penalized in Europe in recent years; Apple, Microsoft, Meta, and Google have all been fined by the EU or individual nations.
