Summary of Commission Decision of 5 September 2023 relating to a decision pursuant to Article 3 of Regulation (EU) 2022/1925 (Case DMA.100040 – BYTEDANCE – ONLINE SOCIAL NETWORKING SERVICE) (notified under document number C(2023) 6102 final)
Date: 2023-09-05
Institutions: Directorate-General for Competition, European Commission
Subjects: competition law, digital content, digital economy, digital single market, provision of services, social media








C_202300552EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2023/552


27.10.2023






Summary of Commission Decision
of 5 September 2023
         
relating to a decision pursuant to Article 3 of Regulation (EU) 2022/1925
(Case DMA.100040 – BYTEDANCE – ONLINE SOCIAL NETWORKING SERVICE)


(notified under document number C(2023) 6102 final)


(Only the English text is authentic)
(C/2023/552)


On 5.9.2023, the Commission adopted a decision pursuant to Article 3 of Regulation (EU) 2022/1925. In accordance with the provisions of Article 44 of Regulation (EU) 2022/1925
          (1)
, the Commission herewith publishes the names of the parties and the main content of the decision, having regard to the legitimate interest of undertakings in the protection of their business secrets.

1.   INTRODUCTION









(1)


The Designation Decision (‘the Decision’) designates ByteDance as a gatekeeper pursuant to Article 3 of Regulation (EU) 2022/1925 (‘DMA’) in relation to one core platform service that is provided by ByteDance and which, following the Commission’s analysis, is an important gateway for business users to reach end users as referred to in Article 3(1)(b) DMA.












(2)


Together with its notification, ByteDance submitted pursuant to Article 3(5) DMA arguments aimed at rebutting the presumption that it should be designated as a gatekeeper because its service TikTok meets the thresholds laid down in Article 3(2) DMA. ByteDance submitted rebuttal requests for two alternative delineations of its platform TikTok as (i) an online social networking service, and (ii) a video-sharing platform service. The Decision rejects this rebuttal of TikTok because the arguments presented do not manifestly call into question the presumption that it is a gatekeeper.




2.   PROCEDURE









(3)


On 3 July 2023, ByteDance notified the Commission, pursuant to Article 3(3), first subparagraph, DMA, that it meets the thresholds laid down in Article 3(2)(a) and Article 3(2)(b) DMA, but not those laid down in Article 3(2)(c) in relation to its TikTok service which it considers to qualify as a video-sharing platform service CPS as opposed to an online social networking service CPS. With its notification, ByteDance submitted a rebuttal (see Introduction).












(4)


On 26 July 2023, the Commission sent a letter concerning ByteDance’s notification outlining its preliminary views on ByteDance’s notification. ByteDance replied to the Commission’s letter on 2 August 2023.












(5)


On 17 August 2023, a virtual meeting took place, at ByteDance’s request, between ByteDance and the Commission services for ByteDance to present and further explain the arguments and views presented in its Form GD and in its 2 August 2023 reply.




3.   LEGAL FRAMEWORK









(6)


The DMA establishes a set of narrowly defined objective criteria for qualifying a large online platform as a gatekeeper. Designation is to be made in relation to one or more CPSs provided by the undertaking that are an important gateway for business users to reach end users within the meaning of Article 3(1), point (b) DMA. In order to determine whether a service provided by an undertaking is a CPS that meets the requirement set out in Article 3(1), point (b) of the DMA, it is necessary, as a preliminary step, to qualify and delineate the respective service. A relevant criterion for qualifying and delineating CPSs is the purpose for which the service is used by either end users or business users or both.












(7)


According to Article 3(1) DMA, the Commission is to designate an undertaking as a gatekeeper if it fulfils three cumulative requirements, namely: (a) it has a significant impact on the internal market; (b) it provides a CPS which is an important gateway for business users to reach end users; and (c) it enjoys an entrenched and durable position, in its operations, or it is foreseeable that it will enjoy such a position in the near future. Article 3(2) DMA lays down a presumption that those requirements are satisfied where certain quantitative thresholds are met, namely the company’s turnover or market capitalisation as well as the numbers of end users and business users of a particular CPS in each of the last three financial years.












(8)


Pursuant to Article 3(5), first subparagraph DMA, an undertaking that meets all the thresholds laid down in Article 3(2) DMA may present, with its notification, arguments to demonstrate that, although it meets all those thresholds, it exceptionally does not satisfy the requirements laid down in Article 3(1) DMA due to the circumstances in which the relevant CPS operates. Article 3(5), second subparagraph, DMA provides that if the arguments submitted are not sufficiently substantiated because they do not manifestly call into question the presumptions set out in Article 3(2) DMA, the Commission may reject the arguments. By contrast, should the Commission considers that the submitted evidence is sufficient to demonstrate that the requirements laid down in Article 3(1) DMA are not fulfilled, it may accept the rebuttal with or without opening a market investigation pursuant to Article 17(3) DMA.




4.   THE COMMISSION’S ASSESSMENT









(9)


The Decision finds that TikTok constitutes an online social networking CPS pursuant to Article 2 DMA and is individually an important gateway for business users to reach end users as referred to in Article 3(1)(b) DMA.












(10)


While the Decision does not contest that TikTok meets the definition of a video-sharing platform service, the Commission considers that the features and functionalities of TikTok go beyond those of a video-sharing platform service. The Commission considers that TikTok not only fulfils the definition of an online social networking service, but that that classification also best reflects the characteristics and breadth of TikTok’s features and functionalities. Consequently, the Commission considers that TikTok constitutes an online social networking CPS.












(11)


The Decision also finds that ByteDance’s methodology for counting TikTok’s end users and business users for the purpose of assessing whether the thresholds laid down in Article 3(2)(b) and (c) DMA are met is flawed. To the contrary, based on the information provided by ByteDance, the Commission concludes that ByteDance meets all the thresholds in Article 3(2) in relation to TikTok.












(12)


Last, the Decision considers that many of ByteDance’s rebuttal arguments are not considerations which the DMA recognises as justifying an exceptional rebuttal of the presumptions in Article 3(2) DMA. In any event, based on the assessment in the Decision, the Commission concludes that ByteDance’s rebuttal arguments are not sufficiently substantiated to manifestly call into question the presumption that it is a gatekeeper in relation to its service TikTok. Therefore, the Decision rejects the rebuttal.












(13)


The findings in the Decision are based on the information available to the Commission at the time of the Decision. Should there be any substantial change in any of the facts on which this Decision is based, or if this Decision is based on incomplete, incorrect or misleading information, the Commission may reconsider or amend the Decision pursuant to Article 4(1) DMA.




5.   CONCLUSION









(14)


For the reasons set out above, the Decision designates ByteDance as a gatekeeper in relation to ByteDance’s online social networking service TikTok. It further rejects the rebuttal arguments raised by ByteDance in this regard.






(1)  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 (Digital Markets Act) (OJ L 265, 12.10.2022, p. 1).


ELI: http://data.europa.eu/eli/C/2023/552/oj
ISSN 1977-091X (electronic edition)