ByteDance must keep gatekeeper label, EU court rules to strengthen regulators’ position

BRUSSELS (July 17): TikTok owner ByteDance lost a court case on Wednesday challenging its designation as a market watchdog under landmark European Union rules, a boost for antitrust regulators seeking to rein in Big Tech’s influence.

Under the EU’s Digital Markets Act (DMA), controllers are required to ensure that their messaging apps work with competitors, allow users to decide which apps are installed by default on their devices, and are not allowed to favour their own services over those of competitors.

ByteDance argued that its designation could undermine the purpose of the DMA, protecting dominant companies from newer competitors like TikTok, which has yet to become established.

The Luxembourg court sided with the European Commission, the EU’s executive arm, and dismissed its complaint, finding that ByteDance had not sufficiently substantiated its arguments.

ByteDance can appeal to the Court of Justice of the European Union, Europe’s highest court.

“The Commission was fully entitled to find that Bytedance acted as a gatekeeper,” the judges said.

The judges found that the company met the DMA’s quantitative thresholds relating to its global market value, the number of TikTok users in the EU and the number of years in which the user threshold was met.

The Court of First Instance also noted TikTok’s rise in popularity, which puts it on a par with rivals Meta Platforms and Alphabet.

“It quickly consolidated its position and further strengthened it in the following years, despite the launch of competing services such as Reels and Shorts, to the point that it quickly reached half the number of Facebook and Instagram users in the European Union,” the judges said.

ByteDance said it was disappointed with the decision.

“While we are now evaluating next steps, we have already taken actions to ensure that we are meeting the relevant DMA obligations by the March deadline,” a TikTok spokesperson said.

The Commission has taken note of the judgment and intends to analyse it, it said in an emailed statement.

Other companies designated as gatekeepers include Alphabet, Amazon, Apple, Booking.com, Meta Platforms and Microsoft.

Apple has also challenged the DMA, arguing that its five App Stores on iPhone, iPad, Mac, Apple TV and Apple Watch should not be characterized as a single-core platform service. The company has also criticized regulators for characterizing its iOS operating system as an important gateway for business users.

Meta is also disputing the role of gatekeeper for its Messenger and Marketplace platforms.

The DMA aims to ensure a level playing field for competitors and greater choice for consumers.

Case number T-1077/23 Bytedance v Commission.

Posted by Magessan Varatharaja