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Court is expected to issue its ruling next year

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Companies challenge how fee is calculated

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European Commission defends its methods as fair

By Foo Yun Chee

LUXEMBOURG, June 11 (Reuters) - Meta Platforms ( META )

and TikTok said a European Union supervisory fee levied on them

was disproportionate and based on a flawed methodology as they

took their fight with tech regulators to Europe's second highest

court on Wednesday.

Under the Digital Services Act that became law in 2022, the

two companies and 16 others are subject to a supervisory fee

amounting to 0.05% of their annual worldwide net income aimed at

covering the European Commission's cost of monitoring their

compliance with the law.

The size of the annual fee is based on the number of average

monthly active users for each company and whether the company

posts a profit or loss in the preceding financial year.

Meta told judges at the General Court it was not trying to

avoid paying its fair share of the fee, but it questioned how

the Commission had calculated the levy, saying it had been based

on the revenue of the group rather than of the subsidiary.

Meta's lawyer Assimakis Komninos told the panel of five

judges the company still did not know how the fee was

calculated.

He said the provisions in the Digital Services Act, or DSA,

"go against the letter and the spirit of the law, are totally

untransparent with black boxes and have led to completely

implausible and absurd results".

ByteDance-owned Chinese online social media platform TikTok

was equally critical.

"What has happened here is anything but fair or

proportionate. The fee has used inaccurate figures and

discriminatory methods," TikTok lawyer Bill Batchelor told the

court.

"It inflates TikTok's fees, requires it to pay, not just for

itself, but for other platforms and disregards the excessive fee

cap," he said.

He accused the Commission of double counting the companies'

users, saying this was discriminatory because users switching

between their mobile phones and laptops would then be counted

twice.

He also said regulators had exceeded their legal power by

setting the fee cap at the level of group profits.

Commission lawyer Lorna Armati rejected both companies'

arguments and defended the Commission's use of group profit as a

reference value to calculate the supervisory fee.

"When a group has consolidated accounts, it is the financial

resources of the group as a whole that are available to that

provider in order to bear the burden of the fee," she told the

court.

"The providers had sufficient information to understand why

and how the Commission used the numbers that it did and there is

no question of any breach of their right to be heard now,

unequal treatment," she said.

The Court is expected to issue its ruling next year.

The cases are T-55/24 Meta Platforms Ireland v Commission

and T-58/24 TikTok Technology v Commission.