ByteDance, the parent company of the popular short video platform TikTok, recently faced a significant legal setback in Europe. The company lost a series of court hearings where it sought to challenge its designation as a “gatekeeper” under the European Union’s Digital Markets Act (DMA). This status imposes additional responsibilities on ByteDance, such as ensuring compatibility of its messaging systems with those of competitors and allowing users to independently decide which applications to install on their devices. Additionally, gatekeepers are prohibited from favoring their own services over those of competitors.
ByteDance argued that this designation undermines the DMA’s original goals by strengthening the market positions of dominant companies and making it harder for new competitors like TikTok to establish themselves. However, the European Court of General Jurisdiction in Luxembourg sided with the European Commission, the EU’s executive body, rejecting ByteDance’s claim. The court ruled that the Commission had sufficient grounds to consider ByteDance an “intermediary,” citing the company’s market value, the number of TikTok users in the EU, and the timeframe within which these were achieved.
Court’s Decision and Implications
The judges highlighted TikTok’s rapid rise in popularity, noting that it has achieved significant market penetration despite competition from Meta Platforms and Alphabet. TikTok’s user base in the EU has grown substantially, placing it on par with major platforms like Facebook and Instagram. This surge in popularity was a key factor in the court’s decision to uphold ByteDance’s gatekeeper status.
A TikTok spokesperson responded to the ruling, stating, “While we will now evaluate next steps, we have already taken steps to comply with the relevant DMA obligations before they take effect in March.” ByteDance still has the option to appeal to the Court of Justice of the European Union, Europe’s highest court. The European Commission, meanwhile, has acknowledged the decision and will study its implications.
Future of Gatekeepers in the EU
ByteDance is not alone in its challenge against the DMA’s gatekeeper designation. Other major companies such as Alphabet, Amazon, Apple, Booking.com, Meta Platforms, and Microsoft have also been appointed as gatekeepers in the EU. Apple is contesting the DMA’s claims, arguing that its various app stores and iOS cannot be considered a single platform or an essential gateway for business users. Meta Platforms has also expressed disagreement with the designation for its Messenger and Marketplace platforms, adds NIXSolutions.
As these companies navigate the regulatory landscape, we’ll keep you updated on any new developments and appeals. The outcome of these cases will significantly shape the future of digital market regulations in the EU.