TikTok loses its appeal against the new European competition rules imposed by the DMA

TikTok’s Legal Battle with the EU Digital Markets Act

TikTok had sought to evade the regulations set forth by the Digital Markets Act (DMA), a new European legislation aimed at curbing the dominant market positions of tech giants. However, the EU Court has rejected TikTok’s request on July 17th. In September, the European Commission identified 22 digital platforms required to comply with the DMA. These platforms, known as “gatekeepers,” are deemed essential for their users by the Commission’s criteria, operating in at least three European countries, with a market capitalization exceeding 75 billion euros or European sales of 7.5 billion, and having at least 45 million active end-users and 10,000 business users in Europe.

Consequences of Being Designated as a “Gatekeeper”

Being labeled as a “gatekeeper” under the DMA comes with strict rules such as making messaging apps interoperable with competitors, allowing users to choose pre-installed apps on their devices, and preventing favoritism towards their services over rivals. Violating companies could face fines up to 10% of their global revenue, or 20% for repeat offenders, and potential dismantlement in severe cases. Despite TikTok’s claims of being an emerging challenger to dominant American tech giants, ByteDance, its parent company, acknowledged the quantitative thresholds set by the DMA.

Reaction and Next Steps

Disappointed by the EU Court’s decision, a TikTok spokesperson stated that the DMA may inadvertently protect monopolies it seeks to challenge. ByteDance plans to evaluate its next actions, emphasizing its compliance efforts since the DMA’s implementation. The company retains the option to appeal within a specified timeframe. Apple and Meta, which owns Facebook, Instagram, and WhatsApp, have also contested the DMA, with pending EU Court decisions. The European Commission’s scrutiny of Apple and Meta’s practices signals potential sanctions unless corrective actions are taken.

Commission’s Scrutiny and Recent Cases

Under the DMA, the European Commission has targeted Apple and Meta for practices like subscription models violating user data consent regulations and hindering access to alternative distribution channels through the App Store. The regulatory landscape for tech giants continues to evolve, with ongoing legal battles and compliance challenges.