On Thursday, Europe's top court ruled in favour of Alphabet's (GOOGL.O) Google, Meta Platforms (META.O) and TikTok in their fight against an Austrian law requiring them to delete hate speech or face fines of up to$10.69 million. The Austrian law, enacted in 2021, obliges Big Tech companies to publish regular reports of illegal content amid mounting concerns worldwide about hateful posts.

Google, Meta, and TikTok challenged the Austrian law in an Austrian court because it is contrary to an EU rule that says online service providers are only subject to the rules of the country where they are established. In contrast, countries where they provide a service must refrain from applying their laws. All three companies, which have their European headquarters in Ireland, say they should only be subject to Irish rules. The Austrian court sought advice from the Court of Justice of the European Union (CJEU), which sided with the companies.

Why does it matter?

This ruling sets a relevant precedent for regulating Big Tech companies in the region. However, the Austrian rules took effect ahead of the EU's Digital Services Act, a new set of digital rules that oblige social media companies to hire more content moderators and use risk mitigation to decrease the spread of harmful content. From its implementation on, companies that fail to comply could face fines as high as 6% of annual revenue or even be banned from the EU if they repeatedly break the rules.