Technology

Meta Challenges EU Supervisory Fee, Sparking Legal Battle Over Digital Services Act

Meta, the parent company of social media giants Facebook and Instagram, is taking legal action against the European Union over the supervisory fee imposed under the Digital Services Act (DSA). This marks the first lawsuit specifically targeting the fee since the introduction of the DSA. The news, initially reported by Politico, sheds light on the growing tensions between tech giants and EU regulations.

The DSA, fully in force later this month, applies to a subset of larger online platforms, including Meta. The regulation permits the EU to charge very large online platforms (VLOPs) and very large online search engines (VLOSE) to cover the costs of overseeing their operations. Meta’s legal challenge centers on the supervisory fee calculation, arguing that the mechanism is unjust, particularly for companies reporting losses.

According to the DSA, the annual fee should consider the European Commission’s costs, be proportionate to the service’s size (based on average active monthly regional users), and account for the provider’s economic capacity. In Meta’s case, the company contributes just under a quarter of the total supervisory fees collected from VLOPs/VLOSE in 2023, amounting to around €11 million.

While the DSA imposes an overall cap on the annual fee, not exceeding 0.05% of the worldwide annual net income of the preceding financial year, Meta contends that the fee calculation unfairly favors companies with reported losses. The legal challenge brings attention to the complexity of regulating large tech entities, with Meta arguing that certain companies with substantial user bases are exempt from fees due to financial losses.

In response to Meta’s legal action, a Commission spokesperson stated, “All Commission decisions are subject to judicial review. It is the right of companies to appeal. However, our decision and methodology are solid. We will defend our position in Court.” The EU emphasizes that the supervisory fee aims to be proportionate to the economic capacity of the provider and is not intended as a penalty but rather as a contribution to monitoring and enforcement.

As the legal battle unfolds at the EU’s General Court in Luxembourg, it underscores the broader challenges of regulating tech giants and the ongoing dialogue between these companies and regulatory bodies seeking to strike a balance between oversight and fair industry practices.

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