On July 17, 2024, the General Court dismissed ByteDance Ltd (“ByteDance”)’s appeal against the Commission’s decision designating ByteDance as a “gatekeeper” under the Digital Markets Act (“DMA”).[1] This marks the first judgment interpreting the DMA’s provisions and clarifying some of its intervention thresholds. The General Court’s ruling follows its earlier rejection of ByteDance’s application for interim measures.[2]
Background
Under the DMA, large online platforms can be designated as “gatekeepers” if they: (i) have a significant impact on the internal market; (ii) provide a core platform service (“CPS”) which is an important gateway for business users to reach end users (e.g., app stores, online search engines, social networking services); and (iii) enjoy an entrenched and durable position or will likely enjoy such a position in the near future.[3]
The DMA sets quantitative criteria which give rise to rebuttable presumptions that each of these substantive conditions is met.[4] To challenge these presumptions, the online platform must demonstrate that, despite meeting the quantitative thresholds, the specific circumstances under which the CPS operates do not meet the substantive conditions for DMA application.[5] If the platform’s arguments are “sufficiently substantiated” to “manifestly call into question” these presumptions, the Commission may open a market investigation.[6] In the alternative, the Commission may reject the arguments presented without conducting a market investigation. Once designated as a gatekeeper, the online platform must comply with the behavioral rules set out in the DMA.
On September 5, 2023, the Commission designated ByteDance as a gatekeeper, considering that TikTok is a CPS meeting the relevant quantitative criteria and therefore must be presumed to meet the substantive conditions triggering DMA application.[7] ByteDance appealed the Commission’s designation decision before the General Court.
The General Court’s judgment
The General Court dismissed ByteDance’s appeal, addressing the following main legal points in the process:
- Types of evidence for rebutting gatekeeper presumption. ByteDance argued in its appeal that the Commission incorrectly rejected certain qualitative arguments and evidence (i.e., arguments and evidence not expressed in figures) it had submitted to rebut the gatekeeper presumptions. ByteDance contended that the Commission was only allowed to discard justifications based on economic grounds, seeking to enter into market definition or to demonstrate efficiencies.[8]
The General Court agreed with ByteDance’s claim that only justifications based on economic grounds, seeking to enter into market definition or demonstrate efficiencies may be a priori discarded as irrelevant.[9] Beyond that, the General Court confirmed that online platforms may submit all arguments and evidence provided they directly relate to one or more of the presumptions or quantitative criteria laid down in the DMA.[10]
- Standard of proof for rebutting gatekeeper presumption. ByteDance also argued that the Commission applied an incorrect standard of proof by requiring “convincing evidence” to rebut the gatekeeper presumptions and avoid opening a market investigation. ByteDance asserted that the mere existence of “doubts” or prima facie evidence that an online platform does not meet the substantive conditions triggering DMA application should suffice to open a market investigation.[11]
The General Court clarified the standard of proof under the DMA, stating that companies must provide sufficiently substantiated arguments that clearly challenge the gatekeeper presumptions.[12] According to the General Court, the arguments must demonstrate “with a high degree of plausibility,” that the gatekeeper presumptions are called into question.[13] This standard of proof is higher than the standard of “doubts” or prima facie evidence put forward by ByteDance.[14]
The General Court then reviewed whether the Commission correctly assessed the evidence and applied the appropriate standard of proof. It upheld the Commission’s approach on all points except one: its assessment of ByteDance’s significant impact on the internal market.
The DMA lays down two alternative quantitative criteria to presume significant impact on the internal market: (i) an online platform must achieve an annual EU turnover of at least €7.5 billion in each of the last three financial years; or (ii) a fair market value of at least €75 billion in the last financial year. ByteDance met the fair market value-threshold, but argued that its low EU turnover, amongst others, demonstrated that its impact on the internal market was not significant. The Commission dismissed this contention as irrelevant, given that the thresholds are alternative, not cumulative.
The General Court corrected this finding, clarifying that online platforms may demonstrate with sufficient evidence—such as low EU turnover—that despite meeting the fair market value-threshold, they do not have a significant impact on the internal market.[15] However, ByteDance’s evidence was insufficient to challenge the presumption of significant impact, so the legality of the Commission’s designation decision remained unaffected.[16]
[1] Bytedance v. Commission (Case T‑1077/23) EU:T:2024:478.
[2] Bytedance v. Commission (Case T-1077/23), order of the General Court of February 9, 2024. See also Cleary Antitrust Watch, “General Court Rejects ByteDance’s Application for Interim Measures,” February 9, 2024, available here.
[3] Article 3(1) of Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (the Digital Markets Act), OJ 2023 L 265/1 (“DMA”).
[4] Article 3(2) DMA.
[5] Article 3(5) DMA.
[6] Article 3(5) and 17(3) DMA.
[7] ByteDance – Online social networking services (Case DMA.100040), Commission decision of September 5, 2023.
[8] Bytedance v. Commission (Case T‑1077/23) EU:T:2024:478, para. 37.
[9] Ibid., para. 46.
[10] Ibid., para. 51.
[11] Ibid., para. 57.
[12] Ibid., para. 60.
[13] Ibid., para. 71.
[14] Ibid., paras. 69-70.
[15] Ibid., para. 90.
[16] Ibid., para. 117.