Incumbent or Challenger?—Assessing Ecosystem Competition in the DMA

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Abstract This article examines the role of ecosystem competition and ecosystem power in designating gatekeepers under the Digital Markets Act (DMA). The study is prompted by ByteDance’s objections to its designation, where it describes itself as a challenger instead of a gatekeeper. The article highlights the differing perspectives of ByteDance, TikTok’s parent company, and the European Commission. ByteDance’s ‘challenger defence’ rests on the idea that they lack ecosystem power. Despite its success within the core platform service, the size of their ecosystem of products is small in comparison to other gatekeepers. This would indicate that they are not entrenched. The Commission focuses on gatekeeper power, and views ByteDance as another incumbent gatekeeper. The Commission currently conducts a very limited assessment of ecosystem power when designating gatekeepers, making it difficult to determine the validity of the ‘challenger defence’. Incorporating a more extensive assessment of ecosystem power and competition between ecosystem operators could enhance fairness and market contestability. Ignoring this aspect could lead to negative consequences and produce negative effects for users and competition in the long-term. The article proposes that there are benefits to contestability if the Commission expands its assessment to include ecosystem competition and offers suggestions on procedural implementation and effectuation of this broader analysis.