ByteDance, the owner of the popular social media app TikTok, faced a significant legal setback on Wednesday. The company lost its court challenge against being designated as a “gatekeeper” under the European Union’s (EU) landmark Digital Markets Act (DMA). This ruling is a win for antitrust regulators who aim to reduce the dominance of Big Tech companies.
The DMA is a regulatory framework designed to ensure fair competition in the digital market. It imposes various obligations on companies identified as gatekeepers, such as:
- Interoperability: Gatekeepers must make their messaging apps work with those of rival companies.
- Pre-installation Choices: Users should have the freedom to choose which apps to pre-install on their devices.
- Non-discrimination: Gatekeepers cannot favor their own services over those of competitors.
ByteDance contended that being labeled a gatekeeper could actually hinder the DMA’s objectives. The company argued that the designation would protect established companies from newer competitors like TikTok, which doesn’t hold a dominant position yet.
The Luxembourg-based General Court, however, sided with the European Commission, the executive branch of the EU. The court dismissed ByteDance’s challenge, stating that the company failed to provide sufficient evidence to support its claims.
“The Commission was fully entitled to consider that ByteDance was a gatekeeper,” the judges stated. They noted that ByteDance met the DMA’s quantitative thresholds, including its global market value, the number of TikTok users in the EU, and the duration for which these user numbers were maintained.
The court highlighted TikTok’s rapid rise in popularity, which places it on a level comparable to other tech giants like Meta Platforms and Alphabet. The judges noted that TikTok had quickly consolidated and even strengthened its market position despite competition from new services like Instagram Reels and YouTube Shorts.
“It had rapidly consolidated its position, and even strengthened that position over the following years, despite the launch of competing services such as Reels and Shorts, to the point of reaching, in a short time, half the size, in terms of number of users within the European Union, of Facebook and of Instagram,” the judges commented.
ByteDance expressed disappointment with the ruling. A TikTok spokesperson said, “While we will now evaluate next steps, we already took measures to comply with the relevant obligations of the DMA ahead of last March’s deadline.”
The European Commission acknowledged the judgment and indicated that it would review it. Other companies designated as gatekeepers include Alphabet, Amazon, Apple, Booking.com, Meta Platforms, and Microsoft.
Apple has also contested the DMA, arguing that its five App Stores on various devices should not be labeled as a single core platform service. The company also disagrees with regulators characterizing its iOS operating system as an important gateway for business users.
Meta Platforms is similarly contesting the gatekeeper designation for its Messenger and Marketplace platforms.
| Obligation | Description |
|---|---|
| Interoperability | Messaging apps must work with rival services. |
| Pre-installation Choice | Users can choose which apps to pre-install on their devices. |
| Non-discrimination | Gatekeepers cannot favor their own services over competitors’. |
This ruling marks the EU’s commitment to maintaining a level playing field in the digital market and ensuring more choices for consumers. The ongoing legal battles from other tech giants highlight the significant impact of the DMA on the industry.
Featured Image courtesy of Forbes India
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