1. Apple, Meta & ByteDance Challenge
The DMA seeks to ensure fair competition between tech giants and smaller market players and protect interests of the European consumers from unfair B2C practices. As already outlined in our previous blog post, this EU regulation is applicable to platforms that qualify as gatekeepers. On 6 September 2023, the European Commission has brought 22 key online services from 6 major tech conglomerates, namely Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft, under the DMA’s regulatory scope. The implications of being designated as a gatekeeper under the DMA are substantial. The designated companies will have to adhere to regulations mandating among other obligations neutrality and openness, fostering interoperability for messaging services, and implementing protective measures for merchants using their marketplaces.
Nevertheless, not all of these companies agree with being designated as gatekeepers. Meta was the first to bring a legal challenge before the EU's General Court, contesting the inclusion of its Messenger and Marketplace services within the DMA's framework. The essence of Meta's appeal revolves around the argument that these specific services do not qualify as gatekeeper services as defined in the DMA. Accordingly, while Meta acknowledges that Facebook qualifies as a gatekeeper under the DMA, it contends that Messenger, being an integral part of Facebook, and Marketplace, being a consumer-to-consumer service without intermediary involvement, should be exempted from the gatekeeper designation. Accordingly, Meta argues that Marketplace does not fall within the definition of the intermediation service under the DMA and Messenger is a simple chat functionality of Facebook service. Meta’s spokesperson emphasized that the appeal aims to seek legal clarification on specific points under the DMA without undermining Meta’s dedication to regulatory compliance and collaboration with the European Commission.
In a similar vein, in its press release, TikTok, owned by ByteDance, challenges its classification as a social network and a digital gatekeeper under the DMA. TikTok argues that it would be 'entrenched' within the market, arguing that it is facing competitive pressure from other undertakings on the market which have imitated its product experience, gaining significant scale quickly. TikTok further claims it invests to compete and grow, believing the gatekeeper label that might restrict its growth. Moreover, TikTok disputes its designation in the 'core platform service' category, suggesting it is wrongly classified based on its content-oriented nature. According to TikTok, its core function is to simply allow users to view short videos on the platform, rather than connecting the end users with each other. TikTok also argues that it does not meet the revenue threshold set by the DMA for the European Economic Area, being designated as a gatekeeper based on its parent company's global market capitalisation, which includes non-European operations, and asserts that the designation decision was made without a comprehensive review of the evidence available to the European Commission. Finally, TikTok emphasizes that the European Commission did not conduct a market investigation, despite similar platforms receiving such investigations, and states that its rebuttal evidence was not adequately considered. Therefore, TikTok believes the designation decision is flawed, based on incomplete information, and without providing the opportunity for a full response.
Finally, Apple's appeal includes efforts to re-classify its core platform services (CPS), particularly with regards to its operating systems (iOS, iPadOS, macOS, watchOS, and tvOS), App Store, and Safari. Apple argues that these CPSs should be segregated according to their device-specific functionalities. Apple argues that each version of its operating systems serves distinct purposes for both end users and business users. Furthermore, with regard to iMessage, Apple challenges its designation as a CPS. In particular, Apple is arguing that iMessage does not fit the definition of a number-independent interpersonal communication service or a gateway for business users to reach end users under the DMA. Accordingly, Apple believes that iMessage is not tailored for business-to-consumer communication, hence, it doesn't meet the criteria outlined in Article 3(1)(b) as a "medium for businesses to connect with end users." Apple further argues that iMessage is provided for free and does not directly intermediate between business and end users.
2. Concluding Remarks and Outlook
The decision by Apple, Meta, and TikTok to legally contest their gatekeeper designation illustrates the complexity involved in defining and categorising tech platforms, particularly considering the rapid technological advancements and their evolving business models. The potential ramifications of these legal challenges have a potentially substantial influence over the EU's new digital regulatory framework for gatekeepers established under the DMA. Indeed, if successful, the appeals could pave the way for redefining the criteria used to designate gatekeeper companies and potentially influence how the DMA is implemented and enforced. Depending on the outcome of these legal battles, they may significantly influence how the EU shapes its digital regulatory framework and, consequently, the pan-European tech (regulatory) landscape.
To conclude, the appeals by Apple, Meta, and ByteDance could mark a crucial juncture in the ongoing debate between ‘Big Tech’ and the European Commission. It, however, seems a safe assumption that these appeals are merely an initial step in a broader discussion between large tech companies and the European Commission seeking to balance innovation, market competition, and consumer protection in the digital sector.