The agreement on the Digital Markets Act sets clear rules for large online platforms. They shall ensure that no large online platform that acts as a “gatekeeper” for a large number of users abuses its position to the detriment of companies wishing to access such users.
On 24 March 2022, EU Parliament and Council agreed on new EU regulations to restrict the market power of large online platforms – so-called “gatekeepers”. Already in December 2020, the EU Commission proposed a Regulation for a Digital Markets Act (DMA), which is to subject large online platforms to stricter regulation. The DMA’s aim is to ensure that the largest tech companies do not abuse their market power in the digital sector, thereby guaranteeing fair competition in the internal market.
According to the EU institutions provisional agreement, the term ‘gatekeeper’ applies to large companies (such as Google, Amazon, Facebook, Apple, Microsoft) with a market capitalisation of 75 billion Euro or an annual turnover of 7.5 billion Euro. The new rules for gatekeeper platforms include restrictions on combining personal data from different sources, mandates to allow users to install apps from third-party platforms, prohibitions on bundling services, and a prohibition on self-preferencing practices. Consumers will also be able to delete pre-installed apps.
The DMA is based on a new approach that lists the dos and don'ts “gatekeeper platforms” have to comply with. As part of market investigations by the EU Commission, the DMA makes it possible to define future relevant “new” unfair practices by gatekeepers and, if necessary, to identify further “gatekeeper platforms”. The EU Commission will also have the power to sanction non-compliant behaviour.
In the negotiations, the EU Parliament succeeded in convincing the Council of interoperability requirements for messaging services. Hence, service providers such as WhatsApp or Facebook Messenger will have to open up and interoperate with smaller messaging platforms. For group chats, this requirement will be rolled out over a period of four years. EU institutions did not reach an agreement on banning targeted advertising in general and for minors respectively, in the DMA. However, they agreed to move the ban on advertising targeting minors to the Digital Services Act, where negotiations are still ongoing. Penalties for breaching the rules can be up to 10 % of annual worldwide turnover in the case of first infringements, and even up to 20 % in the case of repeated infringements. In case of systematic rule breaches (i.e. violating the rules at least three times in eight years), the EU Commission can open a market investigation and, if necessary, impose behavioural or structural remedies. In addition, the EU Parliament successfully negotiated the inclusion of web browsers and virtual assistants into the scope of core platform services. The EU Commission, as lead enforcer of the rules, is now tasked with adequately staffing all relevant services, as well as preparing to enforce the obligations and the prohibitions. The final text of the regulation awaits its formal approval by the EU Parliament and the Council and shall be available in April. The regulation must be implemented within six months after its entry into force.
Welcome progress in fairer competition
From AK’s point of view, the listed dos and don'ts applied to designated “gatekeeper platforms” should definitely be seen as positive as they represent an important step towards creating a level playing field. They are also welcome from a consumer’s perspective. The possibility of flexibly designating platforms as gatekeepers or including new business practices in the list of obligations and prohibitions as part of market investigations must also be seen as positive. However, the sanctions for systematic non-compliance with obligations appear to be insufficient. In particular, the possibility of committing three acts of non-compliance before being sanctioned goes too far and undermines the significance of this important legal instrument. Another important AK demand concerning the DMA was to include organisations dealing with consumer protection and employee interests to the “Digital Markets Advisory Committee” or at least to grant them the right to be heard. This improvement was missed as part of the DMA agreement.