On Wednesday, Meta Platforms, Inc. (NASDAQ:META) and ByteDance-owned TikTok challenged the European Union's supervisory fees under the Digital Services Act, arguing that the fee calculations are flawed and unfairly inflate their charges.
What Happened: The two companies brought their case before the General Court of the EU, arguing that the supervisory fees imposed under the Digital Services Act (DSA) are disproportionate and based on incorrect calculations, reported Reuters.
The fee, which amounts to 0.05% of a company's global net income, is intended to cover the European Commission's costs of overseeing compliance with the law.
Meta's lawyer, Assimakis Komninos, argued that the fee calculation, which uses the group's overall revenue rather than individual subsidiaries' income, was opaque and "led to completely implausible and absurd results."
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He also said that Meta still does not fully understand how the fee was calculated, the report added.
TikTok's lawyer, Bill Batchelor, criticized the method as "inaccurate" and "discriminatory," claiming that the user count was inflated by double-counting users who switch between devices.
TikTok also argued that the fee unfairly includes costs for other platforms and exceeds the legally mandated fee cap.
In defense, Commission lawyer Lorna Armati stated that group profits were the correct reference point for calculating the fee, arguing that the companies had adequate information to understand the methodology and that the Commission's approach complied with legal standards, the report said.
The court is expected to rule on the matter next year
Why It’s Important: Apart from Meta and TikTok, the EU had identified 20 major online platforms and two prominent online search engines -- including Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Apple Inc. (NASDAQ:AAPL), and others -- as subject to this levy under the European Commission's designation.
The annual fee is determined based on each company's average number of monthly active users and its financial results from the previous year, particularly whether it posted a profit or a loss.
Price Action: Meta shares declined by 1.18% on Wednesday and slipped a further 0.43% in after-hours trading, according to Benzinga Pro data.
Benzinga's Edge Stock Rankings indicate a positive trend for META across short, medium and long-term timeframes. More detailed performance data is available here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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