ECJ confirms classification of TikTok as a “gatekeeper”

The Chinese Bytedance Group, which operates the video portal TikTok, has failed with a lawsuit against its classification as a so-called digital gatekeeper. The General Court of the European Union in Luxembourg dismissed the action on July 17, 2024. Bytedance must therefore comply with the stricter rules of the Digital Markets Act (DMA).

Background: The Digital Markets Act

The DMA is intended to ensure fair competitive conditions in the digital sector. It lays down stricter rules for large tech companies that are classified as “gatekeepers”. In addition to Bytedance, these include Alphabet (Google), Amazon, Apple, Meta (Facebook) and Microsoft. The aim is to protect the rights of smaller companies and consumers and to curb anti-competitive behavior. You can find more information on the DMA in my blog post “Digital Markets Act – What companies need to know now”.

Bytedance fulfills gatekeeper criteria

The EU Commission appointed Bytedance as gatekeeper in September 2023. The company took legal action against this decision because, unlike other gatekeepers, it still sees itself as a challenger without an established market position in Europe.

The EU Court did not follow this reasoning. It found that despite strong competition from Meta and Google, TikTok has built up a large user base in the EU in a short space of time, particularly among young people. This means that TikTok serves commercial users as an important gateway to end users and Bytedance has a consolidated market position.

Effects for influencers and users

As gatekeeper, Bytedance must now follow the strict rules of the DMA. These include:

– Obtaining explicit consent from users for the use of personal data for advertising
– Transparency about data processing practices
– Users’ right to refuse or withdraw consent
– Fair contract terms for commercial users such as influencers
– Disclosure of criteria for rankings and recommendations

For influencers, this means fair terms and conditions, more transparency and a more balanced power relationship with the platform. It remains to be seen what effect this will have in practice. Our article “Making influencer marketing legally compliant” provides an overview of the rights and obligations of influencers.

Conclusion

The ruling strengthens the protection of influencers and users on TikTok by the DMA. Bytedance now faces severe penalties for violations, including the obligation to sell parts of the company. An appeal against the decision can still be lodged with the European Court of Justice. It will be interesting to see how the case develops and what impact it will have on other tech giants.