Facebook owner Meta Platforms and ByteDance’s TikTok have successfully challenged the way the European Commission calculates supervisory fees under the landmark Digital Services Act (DSA), in one of the first major challenges to the far-reaching online rules.
The companies welcomed the decision by the EU’s Luxembourg-based General Court, with Meta said was a win over an “unfair” methodology, while the Commission said it was a purely formal decision that did not challenge the substance of its actions.
The companies sued the Commission last year after they were faced with a supervisory fee of 0.05 percent of their annual worldwide income to cover the cost of the regulator overseeing their businesses.
Methodology
The fee is calculated based on the number of average monthly users of the service concerned and whether the firm posted a profit or loss for the preceding year.
The companies said the methodology was flawed and that the fees imposed on them were disproportionate.
In its Wednesday decision, however, the General Court did not find fault with the fees imposed on the social media companies or their obligation to pay the fees.
Rather, it said the methodology used in calculating the services’ average monthly users had been adopted in the wrong legal context.
The user-calculation methodology should have been adopted in a legal vehicle called a delegated act, rather than in the “implementing decisions” by which the Commission determined the fees.
A delegated act is the correct means because the fees are an “essential and indispensable element” of the DSA, the court said.
As such the court annulled the implementing decisions that imposed the fees, while maintaining the effects of the annulled decisions.
It gave the Commission 12 months to establish the user-calculation methodology in a manner that complies with the DSA and to adopt new implementing decisions based on it.
“The duration of this provisional arrangement may not exceed 12 months from the date on which judgments delivered today become final,” the court said.
‘Formal correction’
TikTok said it welcomed the court’s decision and would “closely follow” the development of the delegated act applying to the company.
Meta complained that the user-calculation methodology was unsound and said it would “look forward” to the flaws being addressed, although the General Court did not tell the Commission to change the methodology.
The Commission said the court’s decision had confirmed its methodology was sound and that there was no error in calculation, nor any problem with the principle of the fees or the amounts.
“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,” the Commission said.
The DSA obliges the largest online platforms to implement stricter rules to bar illegal and harmful content from their platforms.
Other companies deemed “very large online platforms” that are subject to the law include Amazon, Apple, Booking.com, Google, Microsoft, social media platform X, Snapchat and Pinterest.
