In a recent development, popular social media platform TikTok suffered a significant setback as it lost its first court challenge against a new European Union law designed to regulate the activities of major tech companies. The decision by judges means TikTok will have to comply with the new legislation, which aims to bring stringent regulations to big tech firms operating in the EU.
The European Court ruled that BYTEDANCE LTD., the parent company of TikTok, falls under the purview of the Digital Markets Act (DMA) that came into effect in March. Although the court’s decision can be appealed, it deemed TikTok eligible for regulation under the DMA and dismissed Bytedance’s attempt to challenge the European Commission’s ruling for lack of evidence.
The DMA imposes restrictions on large tech companies to prevent actions that could harm competition, following past incidents of hefty fines and tax penalties issued by EU regulators. The law applies to platforms with annual sales of at least €7.5 billion ($8.2 billion), a market capitalization of €75 billion, and more than 45 million active users per month or 10,000 active business users per year in the EU.
Under the DMA, tech companies are prohibited from favoring their own services over competitors, combining personal data across platforms, using third-party data for competitive advantage, and restricting the downloading of apps from third-party stores. The law also affects companies like Google Search, Safari, Amazon.com Inc., Apple, and META, all of whom are challenging certain aspects of the new legislation.
TikTok sought clarity from the court on whether it must comply with the DMA, asserting itself as a strong competitor within the industry. The social media app has faced scrutiny from the US government as well, with President Joe Biden signing a bill that could potentially ban the application unless its Chinese parent company agrees to sell it due to concerns about national security risks and Chinese influence.
It is worth noting that META and its products are considered extremist and are banned in Russia. As TikTok navigates these legal challenges in both the EU and the US, the future of the app remains uncertain amidst growing concerns about data security and geopolitical influences.