EU court tosses fee orders for Meta and TikTok but says the money still has to flow

(CN) — Meta and TikTok were supposed to chip in for Europe’s tough digital rulebook, paying annual fees to fund the watchdog overseeing them — but on Wednesday judges said Brussels miscalculated, tossing out the European Commission’s method while keeping the bill on the table for now.

The EU’s General Court in Luxembourg handed Meta and TikTok a win, scrapping the commission’s 2023 fee orders for Facebook, Instagram and TikTok. The fight came down to how Brussels counted “average monthly active recipients,” the number that decides the size of the bill. The court had no issue with charging the fee itself, but it took aim at the way the commission built its formula.

Back in spring 2023, Brussels labeled Facebook, Instagram and TikTok “very large online platforms,” pulling them under the toughest rules of the Digital Services Act — the EU’s rules for big platforms.

By fall, it had worked out the companies’ annual fees. But instead of leaning on the companies’ own numbers, the commission tapped outside analytics firms and built a “common methodology” to apply across the board. Crucially, it put that method in the annexes of the fee decisions, not in a delegated regulation that would have required sign-off from member states, the European Parliament and the council.

Meta and TikTok pushed back, arguing that Brussels had crossed a legal line and had no business inventing a new method on the fly.

The judges sided with them. In Meta’s case, they stressed that “the methodology for calculating the AMAR is intrinsic to the determination of the supervisory fee and must be regarded as constituting an essential and indispensable element of it.”

For TikTok, the message was much the same but put more bluntly: the commission should have gone through the proper delegated-act process instead of tucking its methodology into an implementing decision.

The commission cut corners on a process that EU law reserves for more accountable rulemaking, judges found. Delegated acts come with guardrails, giving Parliament and the council a chance to weigh in. By laying out its approach only in the annexes of fee decisions, Brussels sidestepped that check. The judges decided that was a step too far.

Still, the rulings don’t let the companies off the hook. Both decisions make clear the duty to pay fees remains. What tripped up Brussels was the paperwork, not the principle of charging tech giants for oversight. As the court put it in Meta’s case, “the court has not, by contrast, found that there was an error affecting the obligation in itself for the applicant to pay the supervisory fee for 2023.”

That is why, even while striking down the fee decisions, the judges chose to keep them in place for up to a year, giving Brussels breathing room to sort out the legal flaws. Scrapping the bills right away, they warned, would have left the commission short of the funds it needs to keep watch over the platforms.

For Meta and TikTok, the verdict is a mixed bag. They convinced the court that Brussels overstepped in setting the rules, but the fees themselves are still due while the system gets fixed. For the commission, it’s a clear warning that moving fast is no excuse for skipping the legal steps built into EU law.

That view was echoed by Catalina Goanta, associate professor of private law and technology at Utrecht University, who called the outcome “a procedurally sound interpretation of basic European law, where delegated acts are meant for more general application, and implementing acts can deal with measures of individual application.”

She added that the real difficulty lies in the opacity of tech companies, where even something as basic as user numbers is “shrouded in mystery.”

TikTok welcomed the ruling, saying in a statement to media, “We’ll closely follow the development of the delegated act.”

Meta struck a similar tone, noting that under the current system companies posting a loss may still end up paying less despite huge user numbers, and voicing hope in a statement that “the flaws in the methodology” will be fixed.

The two cases moved side by side and ended with the same outcome, but the companies pressed their points in slightly different ways.

Meta leaned hard on proportionality, noting that Brussels had used “three definitions of AMAR and applied it differently” depending on the context. TikTok, meanwhile, hammered on consistency, saying the commission should have stuck with the same user numbers platforms already reported under other DSA rules.

On one thing they fully agreed: Brussels had blurred the line between delegated and implementing acts. And on that point, the judges were right with them.

The rulings come at a tricky time. The DSA is still new, and Brussels wants to prove it can hold the biggest platforms to account. The fees were meant not just to bankroll that oversight but also to remind everyone that policing the online marketplace costs money. With the methodology tossed out, the commission now has to draft a new delegated act spelling out how to count users, down to the details.

That challenge, Suzanne Vergnolle, professor of digital law at Cnam in Paris, noted, is playing out in an increasingly political climate.

“Any decision on platform regulation can be seen as a political instrument,” she said, warning that this makes proper enforcement harder. She added that building expert groups to bring in evidence and outside know-how is now more crucial than ever.

The fix won’t happen overnight, but the judges spelled out exactly what Brussels has to do.

In Meta’s case, they said the commission is obligated “to establish in a delegated act the ‘detailed’ methodology and procedures for the determination of the fees entails, implicitly but necessarily, the obligation to establish in such an act, at the very least, sufficiently detailed elements of the method for calculating the AMAR.”

TikTok’s ruling hit the same note, brushing aside Brussels’ claim that adding too much detail would be counter-productive.

For now, the annulments are on the books. The commission has to pick up the tab for legal costs in both cases, and no fresh decision on the 2023 fees can be made until the new rules are in place. Brussels still has a window — two months and ten days — to appeal to the EU’s top court.

Courthouse News reporter Eunseo Hong is based in the Netherlands.