Case C-627/24 P, ByteDance v Commission – can a gatekeeper argue its way out?
The Digital Markets Act was designed so that designation would be quick: meet the numbers, and you are a gatekeeper unless you can show otherwise. ByteDance is the first company to ask the Court of Justice what “otherwise” requires.
Facts
On 5 September 2023 the Commission designated ByteDance a gatekeeper under Article 3 of Regulation (EU) 2022/1925 in respect of TikTok, in the Act’s first round of designations. ByteDance had met the quantitative thresholds in Article 3(2) — turnover or market capitalisation, monthly active end users, yearly active business users, over three years — which raise a presumption that the three substantive conditions in Article 3(1) are satisfied: a significant impact on the internal market, an important gateway for business users to reach end users, and an entrenched and durable position. Article 3(5) allows the undertaking to present “sufficiently substantiated arguments to demonstrate that, exceptionally, although it meets all the thresholds … it does not satisfy the requirements”, and lets the Commission reject arguments that “do not manifestly call into question the presumptions”. ByteDance’s arguments were rejected. On 17 July 2024 the General Court (Eighth Chamber, Extended Composition) dismissed its action in Case T‑1077/23 (ECLI:EU:T:2024:478). ByteDance appeals on two pleas.
Grounds of Appeal
According to the Official Journal notice, the appellant asks the Court to set aside the General Court’s judgment, annul the designation decision, and order the Commission to pay the costs of both sets of proceedings.
First plea: The Judgment infringes Arts. 3(1) and 3(5) DMA.
— First part of first plea: The Judgment infringes Arts. 3(1) and 3(5) DMA in applying the wrong legal test for assessing whether the Appellant has provided sufficiently substantiated arguments manifestly calling into question the presumptions set out in Art. 3(2) DMA.
— Second part of first plea: The Judgment infringes Arts. 3(1)(a) and 3(5) DMA as to the significant internal market impact criterion by making the quantitative presumptions de facto irrebuttable. The General Court erroneously relies on large and growing user numbers and disregards the need for a link between market capitalization and monetizable potential of EU users. It also substitutes its own reasoning for that of the Decision and unlawfully dismisses ByteDance’s uncontested evidence.
— Third part of first plea: The Judgment infringes Arts. 3(1)(b) and 3(5) DMA as to the important business-to-consumer gateway criterion by misapplying Art. 3(1)(b) in relation to ByteDance’s lack of ecosystem, significant network effects, multi homing, user lock-in, and relative scale. The Judgment further distorts the evidence, substitutes its own reasoning for that of the Decision, and fails to state reasons as regards multi-homing, intensity of use and interoperability. Finally, the Judgment applies the wrong legal test in its important gateway analysis in relation to multi homing and business user engagement.
— Fourth part of first plea: The Judgment infringes Arts. 3(1)(c) and 3(5) DMA as to the entrenched and durable position criterion. It substitutes its own reasoning for that of the Decision and misapplies the notion of contestability by requiring the displacement of the presumed gatekeeper. Furthermore, the General Court errs in requiring contestability by non-gatekeepers and in ignoring contestability from gatekeeper active in a different CPS. The General Court’s reasoning is moreover contradictory, as the evidence shows contestability by non-gatekeepers for online social networking CPS. Finally, the Judgment commits a legal error in dismissing ByteDance’s evidence regarding new services as inadmissible and applies wrong legal test to the assessment of this evidence.
— Fifth part of first plea: The Judgment infringes Arts. 3(1) and 3(5) DMA in failing to undertake a holistic assessment of the Appellant’s arguments and evidence.
Second plea: The Judgment commits a legal error in concluding that the EC’s breaches of ByteDance’s rights of defence in relation to its alleged ecosystem and TikTok’s intensity of use did not lead to the Decision’s annulment.
Sources
OJ notice C/2024/6639 (EUR‑Lex) · Case file on CURIA · Judgment under appeal, T‑1077/23 (ECLI:EU:T:2024:478) · Regulation (EU) 2022/1925
Comment
Everything in the first plea comes back to one word in Article 3(5): “manifestly”. The presumptions in Article 3(2) are rebuttable by design — the provision exists so that an undertaking which meets the numbers can still show, “exceptionally”, that it is not what the numbers suggest. But the Commission may reject arguments that “do not manifestly call into question the presumptions”, and the General Court upheld its doing so. ByteDance’s case is that the threshold for rebuttal has been set where nothing can clear it — that the presumptions have been made “de facto irrebuttable”. The Court of Justice will have to say what a company must show to get past “manifestly”, and that answer will govern every designation the Commission makes from now on.
The parts of the plea worth reading closely are the second and fourth. On market impact, ByteDance argues that a market capitalisation figure — the Article 3(2)(a) trigger — says nothing about the “monetizable potential of EU users” unless a link between the two is shown, and that the General Court simply relied on user growth instead. On the entrenched and durable position, ByteDance says the General Court required it to show that TikTok had displaced an incumbent — which inverts the inquiry, since a new entrant that is itself contestable is the opposite of entrenched. Both arguments have the same shape: that the General Court read the qualitative conditions in Article 3(1) as restatements of the quantitative ones in Article 3(2), leaving Article 3(5) with no work to do. If the Court agrees, designation becomes a genuine two-stage test; if it does not, the thresholds are the test and Article 3(5) is a formality.
The second plea is narrower but may travel further. ByteDance says the Commission breached its rights of defence on two points — the alleged ecosystem and the intensity of TikTok’s use — and that the General Court found the breaches but declined to annul. Whether a procedural breach in a designation procedure can be cured by the finding that the outcome would have been the same is a question the Court has answered in competition law many times; the DMA’s compressed timetable gives the Commission less room to consult, and the answer here will say how much of that compression the rights of the defence can absorb.
The General Court has since decided two more first-wave challenges, and they point in opposite directions: on 3 June 2026 it annulled part of Meta’s designation in Case T‑1078/23 (ECLI:EU:T:2026:357), and on 8 July 2026 it dismissed Apple’s in Joined Cases T‑1079/23, T‑1080/23 and T‑214/24 (ECLI:EU:T:2026:451). The Court of Justice’s answer in ByteDance will be the frame within which any appeals from those judgments are decided — which is why this is the DMA case to watch, even though TikTok is not the platform anyone expected to lead.