The European Union Court of Justice ruled Thursday that a 2021 Austrian law regulating communications platforms cannot be binding on companies based in a different country.

The Supreme Administrative Court of the Republic of Austria (Verwaltungsgerichtshof) requested a preliminary ruling from the EU court to clarify whether the law, which attempted to impose obligations on domestic and foreign providers of communication platforms, was contrary to an EU directive on electronic commerce.

Google, Meta and TikTok, all of which have subsidiaries established in Ireland, challenged the law in Austrian courts in June 2022. The Bundesgesetz über Maßnahmen zum Schutz der Nutzer auf Kommunikationsplattformen (Austrian Communication Platforms Act 2021) contained provisions seeking to protect users of communication platforms. The act attempted to regulate practices of all “domestic and foreign service providers which provide communication platforms with the intention of making a profit,” with exceptions based on low national usership and low profit.

Article 3(2) of the EU’s electronic commerce directive stipulates that “Member States may not … restrict the freedom to provide information society services from another Member State,” subject to exceptions under Article 3(4), which include public policy, the protection of public health, public security and the protection of customers.

The court held that the platforms are only subject to Irish law, as this is the country they are established in. It highlighted the effect allowing a member state to restrict foreign services would have on the EU’s core principles of mutual trust, mutual recognition and the internal market, which it found the directive sought to preserve.

The EU Digital Services Act package came into force on November 16, 2022, with two main goals: “to create a safer digital space in which the fundamental rights of all users of digital services are protected” and “to establish a level playing field to foster innovation, growth and competitiveness, both in the European Single Market and globally.”