TikTok Loses First Legal Battle Against EU’s Digital Markets Act

Despite Arguments of Being an Emerging Player, TikTok’s Rapid Growth and Market Consolidation Affirm Its Gatekeeper Status

TikTok has lost its first legal challenge against the European Union’s new Digital Markets Act (DMA), marking a significant step in the EU’s efforts to regulate Big Tech. The EU’s General Court ruled that TikTok’s parent company, ByteDance Ltd., meets the criteria to be designated as a “gatekeeper” under the DMA, which aims to prevent anti-competitive practices by major tech companies like Google, Apple, and Meta Platforms Inc.

The court’s decision confirms that TikTok, due to its substantial market presence and rapid growth, falls under the scope of the DMA. ByteDance had argued that TikTok should not be classified as a gatekeeper because it is still an emerging player in a market dominated by established tech giants. However, the judges noted that TikTok has achieved significant user engagement, especially among young users, and has rapidly consolidated its market position since its launch​.

TikTok expressed disappointment with the ruling but emphasized that it has already taken steps to comply with the DMA. The company reiterated its stance as a challenger in the digital marketplace, claiming that the designation as a gatekeeper undermines the DMA’s objective of fostering competition​.

The Digital Markets Act, which took effect in March, sets strict rules for tech companies with annual revenues of at least €7.5 billion or a market value above €75 billion, and more than 45 million monthly active users in the EU. These companies must comply with regulations that include prohibitions on favoring their own services over those of rivals, combining personal data across services, and using data from third-party merchants to compete against them​.

In addition to TikTok, other major tech firms like Apple and Meta have also challenged their designation under the DMA, arguing that certain services should not be included. Despite these legal challenges, the European Commission remains confident that all designated companies are working towards compliance with the new rules​.

Furthermore, TikTok faces additional scrutiny under the EU’s Digital Services Act (DSA), which includes investigations into potentially harmful features for children. Non-compliance with the DSA could result in fines amounting to up to 1% of TikTok’s total annual income​.

These regulatory actions reflect a broader global trend of increasing scrutiny over TikTok due to concerns about its Chinese ownership and data privacy practices. In the United States, legislation aimed at banning TikTok unless its Chinese owner cedes control has gained significant bipartisan support​.