TikTok lost its appeal on Wednesday against the European Union’s new Digital Markets Act (DMA), which aims to curb the power of major tech companies. The Luxembourg-based General Court dismissed ByteDance's challenge, marking the first judgment on a DMA challenge by a big tech company, with similar cases by Apple and Meta still pending.
The DMA, which came into force in March, designates six companies as "gatekeepers": Google parent Alphabet, Amazon, Apple, Meta, Microsoft, and TikTok owner ByteDance. These gatekeepers are subject to new regulations intended to foster a fairer market. The European Commission also indicated that Booking.com would need to comply with the DMA, granting the online travel agency six months for preparation.
Despite TikTok's claim of being the "most capable challenger" to established players, the court rejected this argument. The court noted TikTok's rapid growth, particularly among young users, and its consolidation and strengthening of its market position since 2018.
TikTok expressed disappointment with the decision, stating that it provides significant competition to incumbent platforms. The company mentioned that it had already taken measures to comply with the DMA's requirements before the March deadline.
To be designated as a gatekeeper, a company must meet specific criteria, including having more than 45 million monthly active users in the EU, over 10,000 yearly active business users in the EU, an annual EU turnover of at least €7.5 billion, or a market value exceeding €75 billion. Violations of the DMA can result in fines of up to 10% of a company's global turnover, increasing to 20% for repeat offenses. In severe cases, the EU can mandate the breakup of companies.
This ruling follows a previous court defeat for TikTok in February when it sought to suspend the DMA's new rules pending the judgment handed down on Wednesday. Other big tech companies, such as Apple, have criticized the DMA, arguing that it compromises user security.
TikTok has the option to appeal the ruling within two months and ten days of the decision.