Digital Markets Act (DMA), a milestone European competition law designed to limit dominance of Big Tech companies over the internet came into effect from 2 May 2023.
The European Union (EU) decided to prevent large online platforms (gatekeepers) connecting consumers with content, goods, and services from abusing their market power in order to increase competition and choice, innovation and quality with lower prices with the Digital Services Act package. The package includes the Digital Markets Act and the Digital Services Act.
The ex-ante regulation Digital Markets Act entered into force on 1 November last year, but most provisions of the law start applying from 2 May 2023. The DMA act targets major online platform services, such as social networks, search engines, web browsers, online marketplaces, messaging services, and video-sharing platforms, that have at least 45 million monthly active users in the EU.
Qualitative and quantitative criteria of being a gatekeeper
According to Article 3 of DMA, an undertaking shall be designated as a gatekeeper if:
- (a) it has a significant impact on the internal market;
- (b) it provides a core platform service which is an important gateway for business users to reach end users; and
- (c) it enjoys an entrenched and durable position, in its operations, or it is foreseeable that it will enjoy such a position in the near future.
An undertaking shall be presumed to satisfy the respective requirements in paragraph 1:
- as regards paragraph 1, point (a), where it achieves an annual Union turnover equal to or above EUR 7,5 billion in each of the last three financial years, or where its average market capitalisation or its equivalent fair market value amounted to at least EUR 75 billion in the last financial year, and it provides the same core platform service in at least three Member States;
- as regards paragraph 1, point (b), where it provides a core platform service that in the last financial year has at least 45 million monthly active end users established or located in the Union and at least 10,000 yearly active business users established in the Union, identified and calculated in accordance with the methodology and indicators set out in the Annex;
- as regards paragraph 1, point (c), where the thresholds in point (b) of this paragraph were met in each of the last three financial years.
From May 2, 2023, firms that fulfil the quantitative criteria have two months to provide information required by the Commission, then the Commission gets 45 working days to designate gatekeepers. The Commission can also open market investigations with the aim of designating a firm as a gatekeeper when the firm rebuts the quantitative criteria. By March 6, 2024, the designated companies of the digital markets will have to comply with the obligations outlined in the DMA.
Key measures of Digital Markets Act
DMA rules establish “do’s” and “don’ts” gatekeepers must comply with in their everyday operations. Examples of the “do’s” – Gatekeeper platforms will have to:
- allow third parties to inter-operate with the gatekeeper’s own services in certain specific situations,
- allow their business users to access the data that they generate in their use of the gatekeeper’s platform,
- provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper,
- allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform.
Example of the “don’ts” – designated online platforms may no longer:
- treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper’s platform,
- prevent consumers from linking up to businesses outside their platforms,
- prevent users from un-installing any pre-installed software or app if they wish so,
- track end users outside of the gatekeepers’ core platform service for the purpose of targeted advertising, without effective consent having been granted.
In case of non-compliance Commission has the power to issue fines up to 10% of the global turnover of the gatekeeper. In case of a second a second violation, with regard to the same CPS and in less than eight years following the first violation, the financial penalties may reach 20% of the worldwide turnover. For the third time within the same eight-year timeframe, the Commission may carry out a market investigation into „systematic non-compliance”. If systematic non-compliance is proven Commission has the right to impose any behavioral or structural remedies which are proportionate and necessary to ensure effective compliance including even the break-up of the gatekeeper.
More information on Digital Markets Act: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en
Digital Markets Act: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R1925&qid=1673870123858&from=en
