Meta, previously known as Facebook, is currently challenging the fees imposed on it by EU regulators in accordance with the Digital Services Act (DSA). This new legislation requires online platforms to adhere to strict content moderation rules. However, Meta is dissatisfied with the fee structure, particularly because loss-making companies are exempt from payment. In this article, we will explore the challenges Meta faces under the DSA, the financial implications for the company, and the response from EU regulators.
Meta’s EMEA policy comms spokesperson, Ben Walters, expresses disagreement with the methodology used to calculate the fees imposed by the DSA. In particular, he highlights the unfairness of loss-making companies being exempt from payment, regardless of their user base or regulatory burden. This creates a situation where some companies pay nothing, while others, like Meta, are burdened with a disproportionate amount of the enforcement costs.
Under the DSA, the 20 very large online platforms (VLOPs) are responsible for funding the EU’s enforcement of the new content moderation rules. Meta falls under this category due to its extensive user base of 45 million monthly active users in the EU. As a result, Meta and Google’s parent company, Alphabet, are required to pay approximately three quarters of the total annual enforcement bill, which amounts to €45.2 million (around $48.7 million).
According to a Bloomberg report last year, Meta’s share of this bill is estimated to be around €11 million (around $11.9 million), while Alphabet’s share is €22.1 million (around $23.8 million). However, the fee is capped at 0.05 percent of a company’s annual global profits in 2022. This means that companies such as Amazon and X may end up paying nothing, despite utilizing EU resources for monitoring and enforcing DSA compliance.
An example of this discrepancy is seen with company X, formerly known as Twitter, which is currently under investigation by the European Commission for potentially violating the DSA’s rules. Despite being under scrutiny, X is likely to avoid paying any fees due to its lack of profitability. This raises concerns about the fairness of the fee structure and the burden placed on companies like Meta.
In response to Meta’s legal challenge, a European Commission spokesperson asserts that companies have the right to appeal the fees but defends the decision and methodology as solid. The Commission maintains that it will vigorously defend its position in court. Similarly, other companies like Amazon and Zalando have also challenged the DSA, albeit on different grounds concerning their classifications as VLOPs rather than the specific fees.
It is worth noting that all companies, including Meta, honored their deadline and paid the required fees by December 31st. As the DSA comes into effect, companies are required to be compliant by February 17th. Failure to comply may result in fines of up to 6 percent of their annual revenue or even a ban from operating within the EU.
Meta’s challenge to the fees imposed by the EU under the DSA highlights the complex obstacles companies face in adhering to new content moderation rules. The disagreement over the methodology of fee calculation and the disparity in payment among profitable and unprofitable companies underscores the need for a fair and balanced approach. As the legal battle unfolds, it remains to be seen how EU regulators and companies like Meta will navigate the challenges presented by the DSA.
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