Judgment of the EU Court - Rules for Tech Giants: TikTok loses before EU Court
ByteDance, the operator of TikTok, suffered a defeat at the European Union (EU) court. The judges dismissed ByteDance's lawsuit against its designation as a gatekeeper under the Digital Markets Act (DMA). The EU Commission considered ByteDance and its subsidiary as influential platforms subject to specific EU regulations. An appeal can still be made to the European Court of Justice (ECJ).
Since early March, companies have been required to comply with the DMA. Penalties for non-compliance are significant. The DMA aims to promote more competition in digital services and provide better opportunities for new rivals. The assumption is that some large platform operators have become so powerful that they can cement their market position. The DMA seeks to break this trend with rules for the so-called gatekeepers, which include US heavyweights like Apple, Amazon, Microsoft, Alphabet, and Meta.
Court: Important access point for users
The EU Court, however, rejected ByteDance's main argument that the company's global market value is primarily based on its activities in China and has no significant influence on the EU internal market. TikTok is an important access point for users, according to the court.
ByteDance also argued that it was a new market entrant and that Facebook's Meta or Alphabet, Google's parent company, could quickly challenge its position with competing products. The judges did not follow this line of reasoning: ByteDance managed to rapidly and exponentially increase its user base on TikTok and within a short time - measured by EU user numbers - reached half the size of Facebook and Instagram. Younger people use TikTok intensively.
Several companies, including Zalando, had previously announced their intention to challenge the law. Bytedance's lawsuit is one of the first to be heard at the EU Court.
- Following the EU Court's decision, ByteDance Ltd., the operator of TikTok, now has the option to appeal to the European Court of Justice (EuGH).
- The European Commission has designated TikTok, along with its subsidiary, as influential platforms subject to EU regulations under the Digital Markets Act (DMA).
- In Luxembourg, the European Union (EU) court dismissed ByteDance's lawsuit, upholding the EU Commission's designation of TikTok as a gatekeeper under the DMA.
- The DMA aims to promote competition in online platforms and provide opportunities for new entrants, targeting large platform operators whose power may hinder competition in digital services.
- As a significant access point for users in Europe, TikTok played a crucial role in the EU Court's decision to reject ByteDance's arguments against being classified as a gatekeeper under the DMA.
