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Amazon, X will likely avoid paying bill for enforcing EU's content rules

The commission estimates it needs $47.7 mn to enforce Digital Services Act this year. Very large online platforms required to divvy up those costs based on the number of users they have

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Photo: Bloomberg

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By Jillian Deutsch


Amazon.com Inc. and X, the platform formerly known as Twitter, appear poised to escape paying millions of euros in fees to enforce the EU’s strict new content rules, leaving other tech companies to pay a larger share.
 
The commission estimates it needs €45.2 million ($47.7 million) to enforce the Digital Services Act this year. Very large online platforms — companies with more than 45 million monthly active users in Europe — are required to divvy up those costs based on the number of users they have. 

However, the EU has adjusted the charges to ensure that companies don’t pay a fee above 0.05% of their profit in 2022, meaning that companies that reported a loss don’t have to pay even if they have a large user base or represent a greater regulatory burden. This methodology results in X, formerly known as Twitter, and Amazon not contributing a penny, while Alphabet Inc. and Meta Platforms Inc. together would pay about €31 million — almost three-quarters of the total, according to people familiar with the matter who asked not to be identified discussing information that’s not public.

These preliminary calculations could change before the commission announces the final totals at the end of November, according to the commission’s rules.  

Some of the tech companies view the fee structure as unfair, given the regulatory burden imposed by X and Amazon, said the people. X has spent months publicly sparring with regulators over its content moderation decisions and Amazon, which reported $514 billion in revenue in 2022, has sued the commission over the company’s designation as a very large online platform.

The EU passed the landmark act last year, spurred by what it saw as a failure by powerful firms to combat illegal material on their platforms. 

The new rules require social media companies to hire more content moderators and use risk mitigation methods to decrease the spread of harmful content, while online marketplaces have to trace sellers and allow customers to flag illegal products. Companies that fail to comply could face fines as high as 6% annual revenue or even be banned from the bloc if they repeatedly break the rules.

A representative for the commission declined to comment. Alphabet, Meta and Amazon declined to comment. X did not respond to a request for comment. 

Other online platforms that meet the DSA’s size threshold but weren’t profitable last year include Snapchat and Pinterest. 

Snapchat’s owner Snap Inc. confirmed it would pay nothing. Pinterest didn’t respond to a request for comment. 

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First Published: Oct 18 2023 | 11:14 PM IST

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