As expected, the Digital Markets Act (DMA) has been met with resistance from major technology companies like Apple, Meta, and TikTok, who have disputed being labeled as “gatekeepers” by the Court of Justice of the European Union (CJEU). At the end of 2023, these companies tried to appeal the ruling. However, on Wednesday, one of them experienced a major setback.
The CJEU’s judgment. The CJEU recently issued its first DMA ruling, specifically in the case involving ByteDance, TikTok's parent company.
The ruling firmly supports the European Commission’s right to classify TikTok as a “gatekeeper,” a designation outlined in the DMA that applies to companies with more than 45 million active users and a market capitalization exceeding €75 billion ($82 billion).
The CJEU believes that TikTok has a strong influence. The General Court explains that ByteDancy’s allegations “were not sufficiently substantiated.” On the quantitative side, it’s clear that TikTok is a gatekeeper because it has a very high number of users. However, one of the debates that needed clarification was about the app's influence.
The General Court considers that “TikTok was an important gateway allowing business users to reach their end users and that Bytedance enjoyed an entrenched and durable position.”
TikTok has experienced significant growth in Europe. Another of ByteDance’s arguments is that its high worldwide market value was mainly due to its activities in China. However, the CJEU explains that “the large number of TikTok users in the European Union reflected its financial capacity and its potential to monetize those users.”
The CJEU ruling also indicates that the number of TikTok users has grown exponentially, “reaching, in a short time, half the size of Facebook and of Instagram.”
It also reflects the high usage of TikTok among “young users in particular, who spent more time on TikTok than on other social networks.”
An appeal may be lodged, but Margrethe Vestager’s victory is clear. The General Court concludes by explaining that ByteDance may lodge an appeal for annulment and/or appeal. However, due to the forcefulness of the CJEU’s arguments, this is a clear victory for the European Commission and for competition chief Margrethe Vestager and internal market commissioner Thierry Breton, promoters of the DMA.
A warning to the rest. The ruling doesn’t refer to Apple or Meta’s situation, but many see it as a reflection of the European Justice’s position in the face of the DMA, which has been highly criticized by these U.S. companies. We’ll see how the rest of the cases are resolved and how this law, which is forcing these tech giants to change the way they work, continues to be applied.
This article was written by Enrique Pérez and originally published in Spanish on Xataka.
Image | Solen Feyissa
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