TikTok Designated as a "Gatekeeper" under EU Digital Markets Act: ByteDance's Legal Challenge Dismissed
Brook.X
In September 2023, the European Union notified ByteDance, announcing that its short video application TikTok would be designated as a "gatekeeper" under the EU Digital Markets Act (DMA), subjecting it to stringent regulatory oversight. By November 2023, ByteDance challenged this designation at the EU Court, arguing that TikTok should not be considered a gatekeeper. The court has now issued a preliminary ruling on this lawsuit.
ByteDance contended that TikTok does not hold a dominant position in the EU market, citing significant competition from social media giant Meta's Reels and Google's YouTube Shorts. Arguing against its market dominance and facing fierce competition, ByteDance posited that TikTok should not be designated as a gatekeeper.
However, the General Court of the European Union pointed out that while TikTok was indeed a challenger in 2018, attempting to disrupt the positions of established operators like Meta and Alphabet (Google's parent company), it rapidly solidified its market presence. Within a short span, TikTok achieved half the scale of Facebook and Instagram.
The court added that TikTok meets the criteria for being designated as a gatekeeper, with a global turnover exceeding €75 million in the last three years, more than 45 million monthly active users, and over 10,000 yearly active business users within the EU.
Consequently, the court rejected ByteDance's lawsuit, affirming the EU's decision to classify TikTok as a gatekeeper under the DMA, finding ByteDance's arguments to be untenable.
Being designated as a gatekeeper has significant implications for app developers or service providers, subjecting them to strict legal regulations, including limitations in privacy protection, operations, and advertising sales. The EU aims to ensure that large tech companies do not hinder fair market competition through these stringent regulations.
ByteDance is understandably resistant to TikTok being labeled as a gatekeeper, as it could impact TikTok's future development strategy within the EU. However, the DMA came into effect in March 2024, and TikTok has been complying with its requirements (despite the ongoing lawsuit). ByteDance now has two months to consider an appeal.
The initial list of companies designated as gatekeepers under the DMA includes tech giants like Apple, Google, Microsoft, Amazon, ByteDance, Samsung, Meta, and later, the hotel and ticket booking website Booking.com was added due to its user volume meeting the DMA's specified conditions.
