The Chinese owner of TikTok, ByteDance, on Wednesday lost its appeal against its categorization by the European Commission as a "digital gatekeeper."

The EU General Court in Luxembourg ruled that the designation was warranted under the European Union's new Digital Markets Act (DMA) because short video app TikTok exceeded relevant thresholds including global market value and the number of EU users.

Labeled companies are prevented from forcing users in the bloc to consent to have access to a service or certain functionalities.

What did the EU court find?

ByteDance had argued that its global market value largely came from China, rather than the EU.

It also said TikTok does not operate an exponential user expansion model and that it was acting as a "challenger" to digital monopolies operated by established platforms such as Meta, which owns Facebook and Instagram, and Alphabet, which owns Google. Both companies are also designated as "gatekeepers."

But the EU General Court rejected those arguments, finding that TikTok could no longer be considered a "challenger" on the market, unlike when it joined back in 2018. 

The judges concluded that TikTok had "succeeded in increasing its number of users very rapidly and exponentially" since then, and that its large number of European users does indeed contribute to its global market value.

What is the reaction to the ruling?

A ByteDance spokesperson said the group was "disappointed with this decision" and still insisted that TikTok is a "challenger" to existing market players.

The spokesperson reiterated that TikTok had already taken "measures to comply with the relevant obligations" required by the DMA since March.

ByteDance has two months and 10 days to appeal the decision at the EU's top court, the European Court of Justice.

Meanwhile, the European Consumer Organization (BEUC) welcomed the "good news," saying: "The social medium needs to get consent from millions of TikTok users before their personal data can be used for personalized ads."

As well as ByteDance, the DMA also applies to the operations of US tech giants Alphabet, Amazon, Apple, Meta and Microsoft within the European Union, as well as, since May, the Dutch accommodation reservation platform Booking.

mf/rmt (dpa, AFP, Reuters)