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Counting the costs: analyzing expenses for compliance with EU content moderation laws

Meta Platforms, the parent company of Facebook and Instagram, has announced that it will challenge the European Union's demand for fees under the new content moderation law. The company claims that the fee calculation method is unfair and disproportionate and that it will take the matter to court.

The content moderation law, also known as the Digital Services Act (DSA), is a landmark legislation that aims to regulate the online platforms that operate in the EU. The DSA imposes stricter rules and obligations on the platforms, such as removing illegal and harmful content, protecting users' rights and privacy, and ensuring transparency and accountability. The DSA also requires the platforms to pay fees to the European Commission, the EU's executive arm, to fund the enforcement and supervision of the law.

The DSA applies to all online platforms that offer services in the EU, but it has a special category for the "very large" platforms, which are those that have at least 45 million active monthly users in the EU, equivalent to 10 percent of the bloc's population. The "very large" platforms face additional requirements and scrutiny, such as conducting risk assessments, appointing compliance officers, and cooperating with independent auditors. The DSA also gives the commission the power to impose fines and sanctions on the platforms that fail to comply with the law.

Meta Platforms, which owns Facebook and Instagram, is one of the "very large" platforms that fall under the DSA. According to the commission, Meta Platforms has to pay a fee of 0.05 percent of its annual worldwide net income, which amounts to about 200 million euros ($225 million) for 2023. The fee is calculated based on the size and the regulatory burden of the platform, and it is due by December 31 of each year.

However, Meta Platforms disagrees with the commission's fee calculation method and argues that it is unjust and unreasonable. The company says that the method does not take into account the profitability or the loss of the platform and that it penalizes the platforms that invest more in content moderation and user safety. The company also says that the method creates an uneven playing field, as some platforms pay nothing or very little, while others pay a disproportionate amount of the total.

Meta Platforms has decided to challenge the commission's fee decision in court and has filed an appeal with the General Court of the European Union, the second-highest court in the bloc. The company says that it supports the DSA's objectives and has implemented measures to comply with the law, but that it wants a fair and transparent fee calculation method that reflects the actual costs and benefits of the DSA.

The commission, on the other hand, defends its fee decision and methodology and says that it is solid and lawful. The commission says that the fee is proportional to the size and the impact of the platform and that it does not exceed a reasonable limit. The commission also says that the fee is necessary to cover the administrative and operational costs of the DSA and that it is in line with the EU's principle of "the polluter pays". The commission says that it will defend its position in court.

Meta Platforms is not the only "very large" platform that is unhappy with the DSA. Other platforms, such as Amazon and Zalando, have also challenged their inclusion in the list, and have filed appeals with the General Court. The platforms argue that they are not primarily online intermediaries, but rather online retailers and that they should not be subject to the same rules and fees as the social media platforms.