Digital Markets Act: EU closes in on Big Tech

by Shane Cumberton on 12 Oct 2022

The European Union’s Digital Markets Act (DMA) is set to establish a concrete list of dos and don’ts for the world’s biggest digital platforms when operating in the EU. These include hitherto absent ‘ex ante’ regulations to provide more fairness in the area of antitrust issues. Quite simply, the DMA aims to level the digital market’s playing field to ensure that smaller firms can operate under fairer competition.

The three EU institutions – the European Commission, European Parliament and Council of the EU - reached a provisional agreement on the landmark Digital Markets Act (DMA) on 24 March 2022. In July 2022, the European Parliament and Council of the EU approved the text which has now been published in the Official Journal of the EU. In our latest briefing, we highlight how the DMA will regulate Europe’s digital market, how it will be enforced, and the ramifications that the Act will have for Big Tech’s ‘gatekeepers’.

The DMA sits alongside the Digital Services Act in the Digital Services Act Package. Both texts aim to improve the ease with which new firms can enter and leave digital markets (contestability) in the EU by restraining the anti-competitive behaviours of the market’s largest and most dominant players while offering consumers greater protections.

The DMA will introduce ex-ante regulations to provide more fairness in the area of antitrust issues. In the past, in the absence of such rules, competition issues among online platforms often led to lengthy legal cases – often to the detriment of the EU’s smaller digital companies.

The DMA’s primary device for restraining the market’s biggest players will be the authority that the text gives the European Commission to define a ‘gatekeeper’ platform and to then prohibit these platforms from engaging in unfair practices. These gatekeeper platforms are defined as platforms with such high turnovers, large user bases and entrenched market positions that they have what the EU views as an unfair amount of market dominance.

Under the provisions of the DMA, a platform could be considered as a gatekeeper if it reaches certain quantitative and qualitative thresholds. For example, a gatekeeper platform would have an average annual EEA turnover of €7.5 billion based on the last three financial years; have a market capitalisation of €75 billion; and have 45 million monthly active users in the EU and 10,000 annual business users.

Given the high thresholds, we can expect the DMA to apply only to the largest digital platforms when it comes into effect such as Google, Meta, Amazon, Apple and Microsoft.

Should these platforms be designated as gatekeepers, they will be subject to an array of regulations including bans on self-preferencing of their own products and services in favour of others’ and from combining user data from across a platform’s different services without user consent. Gatekeepers that breach the DMA’s provisions will be subject to hefty fines of between 10% to 20% of a company’s worldwide turnover for the preceding year.

To read more on the details of the DMA as well as what happens next, please click here.

Topics: European Politics, Platforms, Competition policy, Antitrust, Big Tech, Online Platforms, Regulation, Technology

Shane Cumberton

Written by Shane Cumberton

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