Meta and TikTok have formally challenged the EU’s latest big tech crackdown after being labelled “gatekeepers” under the Digital Markets Act (DMA).
The DMA is the EU’s new regulation that aims to down on Big Tech’s control of digital markets by levelling the playing field to encourage competitiveness. One way it plans on doing this is by identifying so-called “gatekeeper” companies it believes hold too much dominance over digital markets.
Companies that are designated as 'gatekeepers' must follow certain rules to ensure fair competition, like no longer deciding which apps are pre-installed on a device or which app stores customers can use.
These gatekeepers include to tech companies operating in the EU with a market capitalisation of more than €75 billion or an annual turnover of €7.5 billion, that operate in at least three member states, and have at least 45 million monthly end users in the EU and 10,000 yearly business users.
The EU labelled 22 core platform services as gatekeepers in September, including services from Google-parent Alphabet, Amazon, Apple, TikTok-parent ByteDance, Meta and Microsoft.
But TikTok – which claimed it had around 150m monthly active users across Europe in February – says it is a challenger, not a “gatekeeper”, in digital advertising and no market investigation was conducted in relation to its designation by the European Commission.
It's appealing the decision and claims it does not meet the threshold to be designated as a gatekeeper. It also claimed that being designated will protect “actual gatekeepers” from newer competitors like itself.
"Our appeal is based on the belief that our designation risks undermining the DMA's own stated goal by protecting actual gatekeepers from newer competitors like TikTok," the video-sharing app said in a statement to Reuters.
“Far from being a gatekeeper, our platform, which has been operating in Europe for just over five years, is arguably the most capable challenger to more entrenched platform businesses."
Big Tech ‘Gatekeepers’
TikTok is not the only big tech company to appeal the EU’s ‘gatekeeper’ designation. Facebook owner Meta also challenged the "gatekeeper" designations on Wednesday for its Messenger and Marketplace platforms – but didn’t appeal against the status for Facebook, Instagram and WhatsApp.
Being labelled as a gatekeeper means Messenger needs to be made interoperable with other messaging services. Its Marketplace also needs to abide by rules that protect the merchants who use it.
Both platforms meet the usage numbers that would qualify them as gatekeepers, but Meta argues that they should be exempted because of other factors. Meta argues that Messenger is a feature of Facebook and not a messaging platform in itself, despite the two platforms being split apart earlier this year.
It doesn’t think Marketplace qualifies either because it’s a consumer-to-consumer service without Meta sitting in the middle or directing generating income from transactions.
“This appeal seeks clarification on specific points of law regarding the designations under the DMA, said a Meta spokesperson Chris Sgro.
“It does not alter or detract from our firm commitment to complying with the DMA, and we will continue to work constructively with the European Commission to prepare for compliance.”
The deadline for tech companies to appeal the European Commission’s gatekeeper designations is tomorrow. The Financial Times reports that a court is expected the rule on the appeals before the March 6th deadline to comply with the regulations.
Amazon, Alphabet and Microsoft have not yet submitted an appeal against the designations, but they have previously challenged other digital rules of the DMA. Apple is expected to join Meta and TikTok appeal at least one of its own designations before the deadline.
