TikTok loses its first legal challenge to European Union’s crackdown on Big Tech
TikTok lost the first legal challenge to the European Union’s crackdown on Big Tech, after judges said the Chinese social media platform can’t escape a new law reining in the likes of Google and Apple Inc.
The EU’s General Court said TikTok parent ByteDance Ltd. is powerful enough to be covered by the bloc’s landmark Digital Markets Act, which took effect in March. The decision can be appealed to the bloc’s top court, the European Court of Justice.
Judges said in a ruling on Wednesday that TikTok met the necessary thresholds to be brought under the scope of the DMA, and that ByteDance’s attempt to appeal the European Commission’s decision to target it wasn’t substantiated.
TikTok said that it’s disappointed with the ruling but that the firm has already taken steps to comply with the DMA. A spokesperson from the commission said it would continue to work with ByteDance to ensure full compliance with the rules.
The DMA is designed to ban the most powerful tech firms from engaging in a list of potentially anti-competitive actions before it’s too late to save markets. It imposes a rigid regime on firms whose practices have previously resulted in billions of euros in fines and tax orders from the EU watchdog.
The rules apply to platforms with sales across the bloc of at least €7.5 billion (US$8.2 billion) or a market capitalization of €75 billion. Platform services are also required to have more than 45 million monthly active end-users and more than 10,000 yearly active business users in the EU to fall under the rules.
The law makes it illegal for certain platforms to favor their own services over those of rivals. They are barred from combining personal data across their different services, prohibited from using data they collect from third-party merchants to compete against them, and have to allow users to download apps from rival platforms.
Alphabet Inc.’s Google Search, Apple’s Safari and Amazon.com Inc.’s marketplace are among the platforms covered by the DMA. Alongside TikTok, both Apple and Meta Platforms Inc. have challenged the designation of certain services under the rules.
TikTok appealed to the court to clarify whether it should be covered by the DMA. In a blog post announcing the decision at the time, the company said it’s “the most capable challenger” to the industry’s biggest players.
The video app is coming under scrutiny across the world as its influence grows and amid fears over its Chinese origins. U.S. President Joe Biden signed bipartisan legislation in April aimed at banning it in the U.S. unless its Chinese owner cedes control. That legislation breezed through both chambers of Congress, and ultimately led to TikTok challenging the legality of the bill.
Meanwhile, TikTok has been investigated by EU regulators for creating potentially harmful features for children. Fines for TikTok’s alleged failings can be as high as one per cent of its total annual income, under another freshly minted law, the EU’s Digital Services Act.
This article was first reported by BNN Bloomberg
