The Malta Independent 23 April 2024, Tuesday
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Tiktok’s request for suspension of 'Gatekeeper' status under Digital Markets Act dismissed

Ganado Advocates Wednesday, 21 February 2024, 10:28 Last update: about 2 months ago

Matthias Grech

On 9 February 2024, the General Court of the European Union (the GC) rejected the application issued by Bytedance Ltd – TikTok’s parent company (the Applicant) – for interim measures vis-à-vis the EU Commission’s challenged decision to designate it as a “Gatekeeper” under the Digital Markets Act (the Decision). In reaching this Decision, the GC refrained from assessing whether there was prima facie case as it held that the applicant failed to prove the urgency condition for interim measures. The GC’s Decision underscores the stringent criteria for granting interim measures and the need for concrete evidence of urgency and irreparable harm.

 

Background

As per Article 3(2) of the Digital Markets Act (the DMA), the classification of ‘Gatekeeper’ is assigned to undertakings that are important core platform service providers that enjoy, or it is foreseeable that they will enjoy, an entrenched and durable position in their operations which has a significant impact on the internal market. The DMA defines core platform services to include, inter alia, online social networking services, video-sharing platform services and online search engines. Amongst the quantitative thresholds required to qualify as a Gatekeeper, the DMA lists an annual Union turnover of at least 7.5 billion Euro in the last 3 financial years, and an active monthly userbase of at least 45 million users for the last financial year. The Commission designated the Applicant as a Gatekeeper on 5 September 2023, as it held that the Applicant met the criteria listed in Article 3(2) of the DMA.  

Dissatisfied with this decision, the Applicant filed an action for annulment and simultaneously sought interim measures under Articles 278 and 279 of the Treaty on the Functioning of the European Union (the TFEU), which allow for the suspension of the operation of a challenged decision pending the outcome of main proceedings. The Applicant argued that compliance with the obligations listed in Articles 5, 6 and 15 would cause it serious and irreparable harm, particularly in terms of disclosing confidential information and hindering its market position. The EU Commission opposed the application for interim measures and requested the applicant to bear the costs.

 

The applicant’s claims

The requirements which emanate from Article 15 of the DMA are twofold. Firstly, a Gatekeeper is required to submit to the EU Commission and, indirectly, to the European Data Protection Board (the EDPB) an independently audited description of the consumer profiling techniques that they adopt across their core platform services. Secondly, the Gatekeeper must also publish, and annually maintain, an overview of the audited description to the public. In this regard, the Applicant claimed that these requirements oblige it to disclose highly strategic and confidential information which, if exposed, would not only hinder its competitive position in the market, but also grant its competitors an unfair competitive advantage.

With regards to Articles 5 and 6, the Applicant particularly based its claims on the requirements imposed by Article 5(2). In essence, Article 5(2) prohibits Gatekeepers from processing their users’ data or, if applicable, cross utilizing their data across their platforms, unless the users provide their express consent. Considering such, the Applicant claimed that, in an industry where personal data is pivotal to success, requiring user consent for certain data uses bars it from leveraging its user data to innovate by offering personalized products and services to its users.

 

The GC’s response

Following its review of the Applicant’s claims, the GC explained how the legal framework for considering interim measures involves assessing urgency, prima facie case, and the balancing of interests. Regarding urgency, the Court assessed whether the Applicant has demonstrated that it would suffer serious and irreparable harm if the decision's operation is not suspended. The Applicant asserted that it faces imminent deadlines for compliance with the regulation, particularly by March 6, 2024. The Applicant argued that compliance with Article 15 of the DMA would result in disclosing confidential information that would hinder its market competitiveness. In response, the GC held that the EU Commission and the EDPB are bound by professional secrecy, therefore assuring that none of the information provided to them will be disclosed to the public. Secondly, Article 15 provides protection for business secrets and doesn't mandate public disclosure of confidential information. In view of these considerations, the court found the alleged harm vis-à-vis Article 15 to be hypothetical and lacking in concrete evidence.

With respect to Article 5(2), the Applicant claimed that the regulatory barrier imposed by this sub-article would hinder its ability to further innovate its products and services. The GC deemed this claim to be speculative, since it assumes that all its users will not grant consent to their data being processed.

In light of the above, the GC concluded that the Applicant failed to prove urgency due to imminent risk of serious and irreparable harm. Consequently, the application was dismissed, and costs were reserved. The Applicant may now proceed with the main proceedings seeking the annulment of the EU Commission's decision. However, it will need to bolster its arguments with robust evidence to support its case. In summary, the GC’s decision reflects a rigorous assessment of the Applicant’s claims and underscores the importance of bringing forward unequivocal evidence of urgency and irreparable harm in order to successfully claim interim measures under Articles 278 and 279 of the TFEU.

 

Matthias Grech is an Advocate at Ganado Advocates.

 

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