The battle over Europe’s digital regulation has intensified as major tech platforms challenge the Digital Services Act fees imposed by the European Union. On Wednesday, Meta Platforms and ByteDance-owned TikTok brought their cases before the General Court of the EU, arguing that the supervisory fees are disproportionate and based on fundamentally flawed calculations.

The core dispute

Under the 2022 Digital Services Act, 20 major online platforms and two prominent search engines – including Google, Apple, and others – are subject to an annual levy of 0.05% of their worldwide net income.

The Digital Services Act fees are designed to cover the European Commission’s costs of monitoring compliance with the comprehensive digital regulation framework.

That fee structure considers two primary factors: the average number of monthly active users and whether companies posted profits or losses in the preceding financial year. However, both Meta and TikTok argue that the methodology behind these calculations is seriously flawed.

Meta’s challenge

According to a Reuters report, Meta’s lawyer, Assimakis Komninos, delivered a sharp critique of the fee calculation process, describing it as opaque and leading to “completely implausible and absurd results.” The company’s primary objection centres on the Commission’s decision to base calculations on group revenue rather than individual subsidiaries’ income.

Komninos emphasised that Meta still lacks a full understanding of how its specific fee was calculated, highlighting a lack of transparency in the process. The company stressed that it wasn’t attempting to avoid paying its fair share but questioned the fundamental methodology used to determine the amount.

TikTok’s accusations

On the other hand, TikTok’s legal team, led by lawyer Bill Batchelor, launched equally fierce criticism of the Digital Services Act fees methodology. Batchelor characterised the approach as both “inaccurate” and “discriminatory,” pointing to specific technical issues in user counting methods.

The company argues that the Commission inflated user numbers by double-counting individuals who switch between different devices – a common practice in today’s multi-device digital environment. TikTok also contends that the fee structure unfairly includes costs associated with other platforms and exceeds legally mandated fee caps.

Commission’s defence

The European Commission, represented by lawyer Lorna Armati, defended its approach vigorously. Armati argued that using group profits as the reference point for Digital Services Act fee calculations was appropriate and legally sound.

She maintained that both companies possessed adequate information to understand the methodology and that the Commission’s approach fully complied with established legal standards.

Broader implications

The legal challenge carries significant implications beyond the immediate financial impact on Meta and TikTok. The outcome could establish important precedents for how digital regulation fees are calculated and implemented in the European Union.

With 22 major platforms currently subject to these charges, the court’s decision will likely influence the broader tech industry’s relationship with EU regulators.

The dispute also highlights ongoing tensions between American tech giants and European regulatory authorities, who have increasingly sought to establish oversight mechanisms for digital platforms operating in EU borders.

What’s next

The General Court is expected to deliver its ruling sometime next year, though the exact timeline remains unclear. The decision will likely influence not only how Digital Services Act fees are calculated going forward but also potentially impact the implementation of other aspects of the comprehensive digital regulation framework.

Industry observers are watching closely, as the case could set important precedents for future regulatory fee structures and the balance between platform oversight and fair calculation methodologies. The outcome may also influence how other jurisdictions approach similar digital platform regulation and fee structures.

For now, the affected platforms must continue paying the disputed fees while awaiting the court’s decision, making this a high-stakes legal battle with significant financial and regulatory implications for the digital economy.

See also: Meta, TikTok face half-billion dollar legal challenge in Brazil over minor protection

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