The Digital Markets Act: the newly adopted EU regulatory regime for large digital platforms.
On 14th September 2022, the European Parliament adopted the final text of the Digital Markets Act (DMA), which was published in the Official Journal of the EU on 12th October 2022. The DMA refers to the Regulation on contestable and fair markets in the digital sector and is amongst the first initiatives to comprehensively regulate the gatekeeper power of the largest digital companies.
The DMA settles objective criteria for qualifying a large online platform as a ‘gatekeeper’ (defined by this act as ‘an undertaking providing core platform services’). Only companies labelled as ‘gatekeepers’ must comply with the rules listed under the DMA. These rules are intended to make the digital sector fairer and more competitive.
For a platform to qualify as a gatekeeper under the DMA it must meet three main cumulative criteria, although designated companies have the opportunity to rebut this presumption. Firstly it must either have had an annual turnover of at least €7.5 billion within the European Union (EU) in the past three years or have a market valuation of at least €75 billion, and secondly it must have at least 45 million monthly end users and at least 10 000 business users established in the EU. The platform must also control one or more core platform services in at least three member states (including marketplaces and app stores, search engines, social networking, cloud services, advertising services, voice assistants and web browsers).
Small and medium enterprises (SMEs) are exempt from being identified as gatekeepers, apart from in exceptional cases.
Companies identified as gatekeepers under the DMA will be subject to a number of obligations in order to make markets more open and contestable, while refraining from engaging in unfair behaviour.
Some of the obligations that gatekeepers will have to comply with are:
- ensure that users have the right to unsubscribe from core platform services under similar conditions to subscription;
- for the most important software (e.g. web browsers), not require this software by default upon installation of the operating system;
- ensure the interoperability of their instant messaging services’ basic functionalities;
- allow app developers fair access to the supplementary functionalities of smartphones (e. g. NFC chips);
- give sellers access to their marketing or advertising performance data on the platform;
- inform the European Commission of their acquisitions and mergers.
Some of the prohibitions imposed on gatekeepers include the following:
- rank their own products or services higher than those of others (i.e. self-preferencing);
- reuse personal data collected during one service for the purposes of another service;
- require app developers to use certain services (e. g. payment systems) in order to be listed in app stores;
- impose unfair conditions on business-users.
Violation of these rules risks a fine up to 10% of the gatekeeper’s total worldwide turnover, and for a repeat offence, a fine of up to 20% of its worldwide turnover. If a gatekeeper systematically violates the DMA (e. g. violating the rules at least three times in an eight-year period), the European Commission can open a market investigation and, if necessary, impose behavioural or structural remedies.
In order to ensure the compliance with the DMA, the European Commission will be the sole enforcer of the regulation, assisted by an advisory committee and a high-lever group. The main tool that the Commission has is the ‘regulatory dialogue’, by which it can make sure that gatekeepers have a clear understanding of the rules contained in the DMA, and to specify their application where necessary.
The DMA will enter into force 20 days after the publication in the Official Journey, that is, on 1st November 2022, and it will become applicable on 2nd May 2023.
The DMA is the first pillar of the EU’s digital regulation and will shortly be completed with the expected approval of the Digital Services Act (DSA), which aims at modernising the e-Commerce Directive regarding illegal content, transparent advertising, and disinformation.
