ByteDance Loses Challenge to Gatekeeper Status Under EU Digital Markets Act

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The General Court of the European Union (GC) on Wednesday ruled that ByteDance, the parent company of TikTok, qualifies as a gatekeeper under the Digital Markets Act (DMA), which subjects the company to stricter regulations aimed at ensuring fair competition and user rights.

The Commission assigned ByteDance gatekeeper status in September 2023 under the DMA. Gatekeeper status under the DMA imposes additional obligations on companies with “a significant impact on their relevant digital market” to uphold European competition law.

The DMA can be seen as an extension of Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of dominance in market competition. Other companies that have been assigned gatekeeper status include Alphabet (Google), Amazon, Apple, Meta, and Microsoft.

The General Court based its decision on several factors, including ByteDance’s significant market influence through its popular platform TikTok, control over critical digital infrastructure, and ability to set rules for other market participants.
The court noted that ByteDance’s substantial user base and extensive data collection capabilities position it as a critical player in the digital market.

As a designated gatekeeper, ByteDance will now be required to adhere to stringent regulations under the DMA. These include ensuring data portability, maintaining interoperability with third-party services, providing business users access to performance data, and avoiding practices that favour its services over competitors. Failure to comply could result in significant fines.

In rejecting ByteDance’s argument that their impact on the European internal market was limited, using TikTok’s European user base as evidence of financial capacity, the GC also ruled that ByteDance’s assertion of an infringement on their right to defence and principle of equal treatment was unfounded.

In response to the ruling, a company spokesperson told Reuters, “We believe that TikTok operates in a highly competitive environment and that our practices align with EU regulations.” ByteDance has not announced plans to appeal the decision.