The digital world is facing a significant shift due to new regulations from the European Union. TikTok and Meta are confronted with a major challenge as a result of these developments. Their response is to legally contest these new rules, indicating an impact on their business models and the broader digital market.
Legal battle against EU regulations
The recent EU regulations place major tech companies like Meta and TikTok in a legal tension. These companies are actively resisting EU efforts to make online markets more competitive. Central to this legal battle are the EU classifications. TikTok is designated as a "gatekeeper." Messenger and Marketplace, both from Facebook, receive the label of "core" services.
Meta is appealing this classification. The company argues that Messenger is merely a chat function within Facebook and should not be considered a separate app or service. Meta also disputes the view of Marketplace as a "gateway" for businesses, emphasizing that it is a consumer product. Meta presents these arguments to the courts. The European Commission refrains from commenting.
The situation surrounding Meta and TikTok serves as a mirror for the broader response of the tech industry to the new EU legislation. This response also includes other major players like Apple and Amazon, who fall under the same law and are currently considering legal action. This stands in stark contrast to companies like Microsoft and Google, which, despite their classification as "core" services, choose not to appeal their designations. The variety in these approaches not only highlights the complexity but also showcases the diversity of viewpoints within the tech industry regarding the new regulatory frameworks in the EU.
Impact on large tech companies in the EU.
These legal challenges could drastically change the way large tech companies earn billions in Europe. The Digital Markets Act requires companies to adapt their services for the first time in a way that allows for efficient and effective collaboration with their competitors, and closed ecosystems must be opened up to competing services.
Challenges of the Digital Markets Act.
Although TikTok and Meta are the first to challenge the Digital Markets Act, similar appeals against other legislation have rarely succeeded. The Digital Markets Act is expected to come into effect in the first quarter of 2024 and aims to reduce the dominance of a few companies in digital markets within the EU. Concerns have been raised that increased regulation could stifle innovation and thus hinder the growth of European digital companies.
Deadline for judgment and cooperation.
Companies have until March 6 to comply with the new regulations. However, appeals against the laws do not mean that they do not have to adhere to the laws. A court in Luxembourg is expected to rule on the appeals within a few months, rather than the usual duration of several years for competition investigations.