Meta and TikTok win EU court challenge on supervisory fee methodology

New Delhi: Meta Platforms and TikTok have won a legal challenge against the European Commission over the way regulators calculated supervisory fees under the Digital Services Act (DSA), though they will not be refunded payments made in 2023 while a new methodology is drawn up.

According to the report, the two companies contested the Commission’s decision to impose a supervisory fee of 0.05% of annual worldwide net income, arguing the approach was flawed and led to disproportionate costs. The levy was introduced to cover the expense of monitoring compliance with the DSA, which came into force in November 2022.

The General Court in Luxembourg sided with the companies, ruling that regulators must revise their approach within 12 months and use a delegated act rather than implementing decisions.

"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," the judges said.

The court clarified that regulators are not obliged to reimburse the 2023 fees while a new legal basis is established.

The European Commission said the judgment left the overall principle of the supervisory fee intact. "The Court's ruling requires a purely formal correction on the procedure. We now have 12 months to adopt a delegated act to formalise the fee calculation and adopt new implementing decisions," a spokesperson said, as per the report.

The DSA places additional obligations on very large online platforms to act against illegal and harmful content, with potential fines of up to 6% of annual global turnover for non-compliance.

Other companies subject to the supervisory fee include Amazon, Apple, Booking.com, Google, Microsoft, X, Snapchat and Pinterest.