Meta, TikTok win challenge against EU tech fees, forcing regulators to recalculate

A visitor passes the TikTok exhibition stands at the Gamescom computer gaming fair in Cologne, Germany, Thursday, Aug. 25, 2022. (AP Photo/Martin Meissner, File)

BRUSSELS — Meta Platforms and TikTok on Wednesday won a legal challenge to the way EU regulators calculated a supervisory fee imposed on them under landmark tech rules, but will receive no money back while officials reformulate the levy.

Meta and ByteDance’s TikTok sued the European Commission after they were hit with a supervisory fee of 0.05 per cent of their annual worldwide net income to cover the EU executive’s cost of monitoring their compliance with the Digital Services Act.

The size of the annual fee is tied to the number of average monthly active users for each company and whether each posts a profit or loss in the preceding financial year. The two companies said the methodology was flawed, resulting in disproportionate fees.

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The Luxembourg-based General Court sided with Meta and TikTok, giving European Union regulators 12 months to fix their methodology using a different legal act.

“That methodology... 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,” judges said.

They said regulators need not repay the 2023 fees paid by the companies for now, while they come up with a new legal basis for the methodology used to determine the size of the fee.

The Commission said the court had confirmed that its fee methodology is sound and sees no issue with the principle of the fee nor the amount.

“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 adopt new implementing decisions,” a Commission spokesperson said.

TikTok welcomed the court’s decision. “We’ll closely follow the development of the delegated act,” a TikTok spokesperson said.

Meta welcomed the judgment.

“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,” a Meta spokesperson said.

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The DSA, which entered into force in November 2022, requires very large online platforms to do more to tackle illegal and harmful content on their sites or risk fines as much as 6 per cent of their annual global turnover.

Other companies required to pay the supervisory fee include Amazon, Apple, Booking.com, Google, Microsoft, Elon Musk’s X social media platform, Snapchat and Pinterest.

The cases are T-55/24 - Meta Platforms Ireland v Commission and T-58/24 - TikTok Technology v Commission.

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Reporting by Foo Yun Chee; Editing by Tomasz Janowski and Jan Harvey