The EU Digital Markets Act Explained
The EU’s Digital Markets Act (DMA) is designed to maintain a healthy level of competition between digital companies by applying certain rules and sanctions, if not followed, to the so-called “gatekeepers“, the largest digital platformsthat currently dominate the online space. At the same time, it aims to encourage innovation in the online marketplace and protect the rights and interests of businesses and consumers alike.
The DMA entered into force at the beginning of November 2022 and its rules became applicable on 2 May 2023, with the European Commission acting as the sole enforcer.
Who does the DMA apply to?
The DMA applies to the so-called “gatekeepers”, i.e. the major online players in the digital market, which are selected according to certain quantitative criterias and regulated under the DMA in order to prevent potential abuse of market power.
On 6 September 2023, the European Commission designated 6 gatekeepers that will have to comply with the DMA’s compliance standards 6 months after that date.
The 6 gatekeepers mentioned were:
Below is a graphic published by the European Commission showing the 6 gatekeepers and their core platform services.
What criteria did the European Commission use to identify the gatekeepers?
Three main quantitative criteria were used:
- The company has a certain annual turnover in the European Economic Area and provides a core platform service in at least three EU Member States;
- the company provides a core platform service to more than 45 million monthly active end users resident or located in the EU and more than 10,000 annual active business users residing in the EU; and
- the company has met the second criterion for the last three years.
What are the rules and sanctions of the Digital Markets Act?
There are certain do’s and don’ts that gatekeepers must be aware of. All with the aim of contributing to fair competition, innovation and consumer benefits.
According to the Commission, here are some examples of do’s and don’ts.
Gatekeepers must do this in the future:
- Allow third parties to work with the Gatekeeper’s own services in certain situations.
- Grant your business customers access to the data they generate when using the Gatekeeper Platform.
- Provide advertisers and publishers with the necessary tools and information to self-review the ads hosted by the Gatekeeper.
- Offer business customers the opportunity to advertise and contract with their customers outside of the Gatekeeper platform.
In the future, gatekeeper platforms will no longer be allowed to:
- Rate services and products offered by the Gatekeeper itself better than comparable services and products offered by third parties on the Gatekeeper Platform.
- Prevent consumers from engaging with companies outside of their platform.
- Prevent consumers from uninstalling pre-installed software or applications if they wish.
- Track end users outside of the gatekeeper’s core platform service for targeted advertising purposes without effective consent.
❗Failure to comply may result in penalties of up to 10% of the company’s global annual turnover, and up to 20% in the event of repeat infringement.
Gatekeepers must now comply with the obligations and prohibitions set out by the EC and submit a report to the EC describing the measures taken to ensure compliance. They must also provide the EC with an audit describing the customer profiling techniques used.
In conclusion, the enforcement of the DMA will result in a fairer playing field between gatekeepers and smaller companies, including potential new entrants.