Background on the Companies Involved
Meta Platforms and TikTok, owned by ByteDance, have emerged victorious in their legal battle against a supervision fee imposed by the European Union under historical tech regulations. The second-highest court in Europe, the Court of Justice of the European Union (CJEU), criticized EU regulators for their methodology in calculating this fee.
The Dispute Over the Supervision Fee
Meta and TikTok challenged the European Commission after being subjected to a 0.05% supervision fee on their global annual net revenues. This fee was intended to cover the costs associated with the EU executive’s oversight of compliance with the Digital Services Act (DSA).
The annual fee amount is linked to the average monthly active users of each company and whether they reported profits or losses in the previous fiscal year. Meta and TikTok argued that the methodology was flawed, leading to disproportionate fees.
CJEU’s Ruling in Favor of Meta and TikTok
The Court of Justice in Luxembourg sided with Meta and TikTok, granting EU regulators a 12-month deadline to rectify their methodology through another legal act.
“That methodology (…) should not have been adopted in the context of execution decisions, but rather through a delegated act, in accordance with the provisions set out in the DSA,” said the judges.
The court ruled that regulators do not need to refund the 2023 fees paid by the companies immediately while they establish a new legal basis for the methodology used to determine the fee’s size.
The Digital Services Act and Its Implications
The Digital Services Act (DSA), effective since November 2022, mandates large online platforms to do more in combating illicit and harmful content on their sites or face fines up to 6% of their annual global turnover.
Other companies subjected to the supervision fee include Amazon, Apple, Booking.com, Google, Microsoft, Elon Musk’s social network X, Snapchat, and Pinterest.
Key Questions and Answers
- What was the dispute about? Meta and TikTok challenged a supervision fee imposed by the European Union, arguing that the methodology used to calculate it was flawed and led to disproportionate fees.
- Who are the other companies affected by this ruling? Along with Meta and TikTok, other companies subject to the supervision fee include Amazon, Apple, Booking.com, Google, Microsoft, Elon Musk’s social network X, Snapchat, and Pinterest.
- What is the Digital Services Act (DSA)? The DSA, effective since November 2022, requires large online platforms to take more action against illicit and harmful content on their sites or face fines up to 6% of their annual global turnover.
- What does the CJEU’s ruling mean for EU regulators? The court granted EU regulators a 12-month deadline to rectify their methodology for determining the supervision fee through another legal act. Regulators do not need to refund the 2023 fees immediately while establishing a new legal basis for the methodology.
