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2024-02-09 7:54 AM

Tech Giants Challenge EU’s Online Platform Fee

  • Meta and TikTok challenge EU's online platform fee, alleging unfairness in the calculation method and exemption criteria.
  • EU defends fee structure, emphasizing proportionality to economic capacity and necessity for regulatory oversight funding.
  • Legal battle ongoing in EU's General Court, with potential implications for future regulation of online platforms.
By Lethabo Ntsoane

In a bid to contest the fees imposed by the European Union (EU) on larger online platforms, tech giants Meta (formerly Facebook) and TikTok have taken legal action against the supervisory charges levied under the EU’s revamped e-commerce regulations. This move marks the first legal challenge specifically targeting the supervisory fee, with both companies citing concerns over the fairness of the fee calculation mechanism.

Challenging the Fee Calculation

The EU Digital Services Act (DSA), set to go fully into force later this month, mandates very large online platforms (VLOPs) and very large online search engines (VLOSE) to contribute financially to cover the costs of EU oversight of their operations. These costs are determined based on factors such as the platforms’ user base, revenue, and designated services. However, Meta and TikTok argue that the current method of calculating the supervisory fee is unjust, particularly the provision that exempts companies reporting losses from payment.

According to Meta’s spokesperson, the fee calculation method unfairly burdens profitable companies while allowing those with substantial user bases but no profit to evade payment. They assert that this creates an inequitable situation, with some companies shouldering a disproportionate share of the fee burden.

EU’s Defence and Fee Structure

In response to the legal challenges, the EU defended its fee calculation methodology, emphasizing that it aims to reflect the economic capacity of the platform without imposing penalties. The EU stresses that the fee is intended to ensure platforms contribute to regulatory oversight without disrupting their operations. Additionally, the EU pointed out that the fee structure considers various factors, including the platforms’ user base, revenue, designated services, and operational days throughout the year.

A breakdown of the supervisory fees collected by the EU in 2023 reveals that Meta contributed nearly a quarter of the total €45.24 million, while Google, with the most designated services under the DSA, accounted for almost half. Other platforms such as TikTok, Apple, Microsoft, and Booking.com also made significant contributions.

PlatformContribution (in € million)
Meta~11
Google~22
TikTok~3.8
Apple~3
Microsoft~2.7
Booking.com~1.45

Legal Proceedings and Future Implications

Meta’s legal challenge is currently being brought before the EU’s General Court in Luxembourg, with TikTok following suit. Despite the legal action, all designated platforms have honoured their commitments to provide the first tranche of fee payments by the end of December.

As the legal battle unfolds, the outcome could have significant implications for the regulatory landscape governing online platforms within the EU. It remains to be seen how the court will rule on the matter and whether adjustments will be made to the fee calculation mechanism in response to the challenges raised by Meta and TikTok.

Conclusion

The legal challenges by Meta and TikTok against the supervisory fees imposed by the EU highlight the complexities and controversies surrounding the regulation of online platforms. While the EU maintains its position on the fairness and necessity of the fees, tech giants are pushing back, questioning the methodology and impact of the charges. The outcome of these legal proceedings could have far-reaching consequences for the future regulation of online platforms in the EU.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo