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The war of TikTok and Meta in Brussels over the supervisory tax for the Digital Services Act

The war of TikTok and Meta in Brussels over the supervisory tax for the Digital Services Act

TikTok and Meta have filed a legal appeal against the calculation method, adopted by the EU Commission, of the supervisory tax which would require the two companies to pay higher rates than their competitors. Facts, numbers and insights

TikTok and Meta go into battle against the supervisory fee, i.e. the EU supervisory tax.

Chinese social media platform TikTok and Meta Platforms (the group that includes Facebook, Instagram and WhatsApp) are appealing to EU courts against tariffs imposed under the Digital Services Act.

According to Bloomberg , TikTok took the European Commission to court on February 6, and Meta filed an appeal the day before, filings show.

Specifically, the Chinese platform owned by BydeDance contested a supervisory fee of 0.05% of its global annual net income to cover costs incurred by EU regulators to monitor compliance with new EU rules, the second company to do so after the group founded by Mark Zuckerberg.

Both companies are attacking the EU's method of calculating these fees, saying they will end up paying a much larger share than other tech giants who may also have a larger user base.

WHAT THE DSA ESTABLISHES

Entering into force last year, the EU's Digital Services Act (DSA) forces social media companies to hire more content moderators and use risk mitigation methods to reduce the spread of harmful content, while online marketplaces must track sellers and allow customers to report illegal products. Companies that don't comply could risk fines of up to 6% of annual revenue, or even be banned from the bloc if they repeatedly break the rules.

Furthermore, under the DSA, companies that have been designated as very large online platforms (including Meta and TikTok) – those with more than 45 million monthly active users in Europe – are required to share the costs necessary to apply the new rules based on the number of users they have.

That is, pay this supervision tax imposed by the EU, intended to finance the work of moderators.

HOW THE EU TAX DISPUTED BY META AND TIKTOK IS CALCULATED

The size of the fee takes into account each company's average monthly active users and whether it made a profit or loss in the previous financial year.

THE TIKTOK PROTEST

“We disagree with the fee and are appealing for a number of reasons, including the use of incorrect third-party estimates of our number of monthly active users as the basis for calculating the total amount,” said a spokesperson for TikTok.

AND THE METAL ONE

Meta also said that, while it supports the goals of the new rules and has already made changes to comply with them, it does not agree “with the methodology used to calculate these fees.”

“Currently, companies that experience a loss do not have to pay, even if they have a large user base or represent a larger regulatory burden,” it said in a statement. This means that “some companies pay nothing, leaving others to pay a sum disproportionate to the total,” the Menlo Park company added.

THE POSITION OF THE EU COMMISSION

For its part, the European Commission will defend its position in court, a spokesperson for the EU executive said in a statement.

“Our decision and methodology are solid,” the Brussels spokesperson said, adding that all affected tech companies had already paid the tariffs due by December 31, 2023.


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/tiktok-si-unisce-a-meta-contro-la-tassa-di-vigilanza-ue/ on Mon, 12 Feb 2024 08:47:44 +0000.