Updated on November 20 at 12:54: According to a Reuters report, Apple has also filed an appeal against being classified as a gatekeeper under the Digital Market Act in the EU. While the details of Apple’s appeal are unclear, the report mentions that the company would challenge the inclusion of its App Store on the list of gatekeepers.
On November 16, social media giants TikTok and Meta filed appeals against the European Union’s classification of their services as “gatekeepers” under the Digital Markets Act (DMA). While TikTok’s appeal was about the platform as a whole, Meta appealed against the gatekeeper status of two specific services— Meta’s Messenger and Meta’s Marketplace.
In a blog post explaining its appeal (as reviewed by MediaNama), TikTok argues that while it is optimistic about the strength of its business, it, “continue[s] to face intense competitive pressure from some of the world’s largest and most successful companies.” It does not clarify who these successful companies are but says that they have “leveraged their existing market advantage” to imitate TikTok’s core product offering and have quickly gained significant scale which took TikTok years to build. The company says that it does not have an entrenched position in the market (a requirement for the gatekeeper classification) and says that being classified as a gatekeeper hampers its ability to remain competitive. It is important to note here that ByteDance has been named as a gatekeeper by the EU, specifically for providing TikTok as a service.
Explaining the reasons behind its appeal, Meta says that Messenger is a feature of Facebook and not a messaging platform unto itself. It argues that its marketplace should also not qualify as a gatekeeper because it’s a consumer-to-consumer service without Meta acting as an intermediary. It says that it has filed the appeal to seek clarification on the “specific points of law regarding the designations of Messenger and Marketplace under the DMA,” its spokesperson Chris Sgro told The Verge.
Who is a gatekeeper under the DMA?
Under the DMA, gatekeepers refer to companies that operate one or more core platform services including (but not limited to) social networking, search engines, advertising services, and video-sharing services. These companies must also meet three additional criteria—
- Strong economic position: Having an annual turnover above €7.5 billion in the European Economic Area (EEA).
- Strong intermediary position: This means that it links a large user base to a large number of businesses. Provides its core platform service to more than 45 million monthly active end users established or located in the EU and to more than 10,000 yearly active business users established in the EU.
- Entrenched and durable position within its respective market: Must have met the first and second criteria during the last three years.
Do’s and don’ts for gatekeepers:
The DMA will prescribe a list of do’s and don’ts for gatekeepers to proactively implement. It gives the following examples of what gatekeepers should and should not do.
Gatekeepers must do the following—
- Allow users to uninstall pre-installed apps, change defaults, and provide choice screens for key services.
- Allow users to install third-party apps or app stores
- Allow end users to easily unsubscribe from the core platform services of the gatekeeper
- Allow third parties to inter-operate with the gatekeeper’s own services
- “Provide the companies advertising on their platform with access to the performance measuring tools of the gatekeeper and the information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper”
- “Allow business users to promote their offers and conclude contracts with their customers outside the gatekeeper’s platform”
- “Provide business users with access to the data generated by their activities on the gatekeeper’s platform”
They must refrain from doing the following—
- Use data of business users when gatekeepers compete with them on their platform
- Rank the gatekeeper’s products or services more favorably compared to those of third parties
- Requiring app developers to the gatekeeper’s services such as payment systems to appear on the app stores of the gatekeeper
- Tracking users outside of the gatekeepers’ core platform service for targeted advertising, without obtaining consent.
TikTok’s arguments against the gatekeeper classification:
Lack of intermediary position: Besides arguing that it does not have an entrenched position, TikTok also says that it is hard to establish that businesses are dependent on it to reach their customers given that the platform only began operation in the region in 2021. “Businesses operating in Europe can already access some of the world’s most ubiquitous platforms to do just this,” it points out.
Not a social networking or advertising platform: The company points out that it has been wrongly classified as a social networking platform because of its “content-led nature”. For advertising, it argues that the company is only a recent entrant in the advertising space and being classified as a gatekeeper diminishes the company’s prospect of “mounting an effective challenge” in the advertising space which has been dominated by a few players.
Lack of strong economic position: The company says that it does not meet the economic threshold to be classified as a gatekeeper and argues that this classification was based on ByteDance’s (TikTok’s parent company) global market capitalization which it argues is primarily based on performance of business lines that do not even operate in Europe.
Lack of market investigation: TikTok says that while other companies’ classification as a gatekeeper was based on market investigation, no such research was conducted for TikTok. Further, it explains that when it submitted evidence against the classification, its rebuttal was not accepted. “The result is a designation decision based on inaccuracies and errors,” it says.
Note: Meta has not elaborated on the details of its appeal to the same extent as TikTok.
- Gatekeepers Under EU DMA: Google, Apple, Meta, Amazon, Microsoft, TikTok
- EU’s Digital Markets Act (DMA) For Gatekeeper Platforms Enters Into Force, Here’s What Happens Next
- EU Negotiators Agree On Tough Rules In Digital Markets Act To Curb Big Tech Dominance
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