Meta And TikTok Enters Legal battle with EU Over Supervisory Fee

Meta Platforms and TikTok are currently challenging the European Union in court over the supervisory fee levied on them under the Digital Services Act (DSA). According to it, TikTok, meta and 16 other platforms will have to pay 0.05% of their earnings to the EU’s cost of monitoring their compliance with the law.

They argue that the charges are unfair, disproportionate, and based on flawed calculations. Both companies contend that the EU Commission’s method for calculating the fee is opaque and inconsistent. Meta argues that the fee is wrongly based on its overall group revenue rather than the revenue generated by its EU-based subsidiaries.

Meta’s lawyer stated that the company still lacks clarity on how the final amount was reached, calling the process “totally untransparent with black boxes” that have led to “completely implausible and absurd results.” Meta emphasizes that it is not trying to avoid paying its fair share but questions the fundamental methodology.

TikTok similarly criticizes the methodology, alleging that it uses “inaccurate figures and discriminatory methods.” Its lawyer claimed that the fee inflates TikTok’s payment and effectively requires the company to help cover costs for other platforms. TikTok also accused the EU of double-counting users by counting the same individual more than once if they switch between devices (e.g., phone and laptop).

Both Meta and TikTok argue that the European Commission exceeded its legal powers by setting the fee cap at the level of group profits, rather than platform-specific earnings. The companies feel that the current system places a disproportionate burden on them, especially compared to other platforms.

In response, the European Commission’s lawyer defended the system, asserting that when a company files consolidated financial reports. It is reasonable to use group-level financial data to calculate the fee. She also stated that companies had sufficient information to understand how the fee was determined and there was no violation of their rights.

The Digital Services Act, which came into effect in 2022, requires very large online platforms (VLOPs) and very large online search engines (VLOSEs) to pay a supervisory fee. This fee, up to 0.05% of their annual global net income, is intended to fund the European Commission’s work in overseeing their compliance with the DSA’s digital rules, which aim to make the online environment safer and more accountable.

A ruling from the General Court, Europe’s second-highest court, is expected next year. The outcome of these cases could set important precedents for how digital regulation fees are calculated and implemented globally, further highlighting the ongoing tensions between major tech companies and European regulators.