TikTok’s parent company, ByteDance, is appealing the designation of its social media application as a gateway that would make the service subject to Europe’s strict regime of ex-ante antitrust rules.
The Digital Markets Act (DMA) is an EU law targeting tech companies that have acquired such a dominant position in specific digital markets that they have become ‘gatekeepers’ between businesses and end users.
This gatekeeper designation comes with strict ex-ante rules that will apply starting March 2024.
In September, the European Commission designated six gatekeepers owning 22 “core platform services”, ranging from video-sharing platforms like YouTube to messaging services like WhatsApp.
Social media platforms like TikTok, LinkedIn, Facebook and Instagram were also designated under the DMA. The designated companies had until Thursday (16 November) to appeal against the designation before the EU’s General Court, which TikTok’s parent company ByteDance, decided to do just before the deadline.
According to ByteDance, its application TikTok does not hold an ‘entrenched’ position, is not an incumbent in the digital advertising market and does not meet the European Economic Area revenue threshold of the law.
“Our designation decisions are publicly available. They set out a solid reasoning for the designations” a Commission spokesperson told Euractiv, adding that “the Commission respects companies’ right to appeal and will defend its decisions in Court”.
The document published by ByteDance explains that contrary to Alphabet, Amazon, Apple, Meta and Microsoft’s 21 ‘core service platforms’, TikTok continues “to face intense competitive pressure” from these digital services.
It argues that competitors have “already leveraged their existing market advantage to imitate” TikTok’s features. It eventually concludes that by regulating TikTok, the service could hamper its ability to innovate and remain competitive.
No incumbent position
The arguments set out by TikTok’s ByteDance are that TikTok for Business was launched in Europe in 2021 only. Being a recent entrant in the digital advertising market, it does not enjoy an ‘entrenched and durable’ position and businesses are not dependent on TikTok to reach customers.
A document published by the Commission in September counter-argues that “ByteDance notified the Commission” on the fact that it met the threshold of having at least 45 million monthly active users established in the European Union or at least 10,000 yearly active business users.
According to ByteDance, TikTok is used by over 134 million people across Europe monthly, but it does not meet the law’s threshold for revenues generated in the European Economic Area (€7.5 billion per annum).
Moreover, the company considers that ByteDance was wrongly designated based on its “global market capitalisation”, meaning its operations in global markets, where ByteDance monetises other services, such as Douyin, the Chinese version of TikTok, or Toutiao, a content discovery platform.
From the Commission’s aforementioned document, it is clearly stated that ByteDance notified the Commission it did meet the threshold allowing to consider ByteDance a “gatekeeper” and TikTok a “core service platform” under the Digital Markets Act.
TikTok’s parent company argues, moreover, that “other platforms in a similar situation to TikTok were granted a market investigation”. Indeed, the Commission is currently investigating whether Apple’s iMessage and Microsoft’s Bing, Edge and Advertising meet the DMA’s thresholds.
The Commission considers that “these investigations aim to ascertain whether a sufficiently substantiated rebuttal presented by the companies, demonstrate that services in question should not be designated”.
Other EU laws
Lastly, ByteDance explains it “embraces” other EU laws, quoting actions put in place under the Digital Services Act, the EU content moderation rulebook, with 6,000 people moderating European content.
On this matter, the Commission sent a request for information to TikTok under the DSA on 9 November, on obligations related “to risk assessments and mitigation measures to protect minors online”, which is following a “request for information concerning the spreading of terrorist and violent content and hate speech” sent by the Commission on 10 October.
[Edited by Luca Bertuzzi/Nathalie Weatherald]
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