WHAT IS THE DMA?

The DMA aims to establish fairer and more competitive digital markets by directly regulating the large online platforms acting as gatekeepers in the digital sector. It sets out obligations and prohibitions targeting anticompetitive practices of major gatekeepers such as Alphabet (Google), Apple, Meta (Facebook), and Amazon. Key goals include preventing gatekeepers from unfairly leveraging data advantages against business users, self-preferencing their own services, limiting interoperability with third parties, and engaging in other behaviors that stifle competition.

The DMA is positioned to prevent gatekeepers from forcing unfair conditions on both businesses and end users. The act requires changes such as allowing easy uninstallation of default apps, providing performance data access for advertising campaigns, enabling alternative in-app payments, and ensuring interoperability of messaging systems. Overall, the DMA seeks to increase the fairness, accountability, and openness of important digital platforms in the EU.

HOW DOES THE DMA RELATE TO THE DSA?

Both the DMA and the Digital Services Act (DSA) are part of the DSA package that was adopted by the European Council and Parliament in 2022. While the DMA focuses on the regulation of large platforms, the DSA takes a broader approach, setting guidelines and rules for all digital service providers operating in the EU, including smaller platforms. It aims to create safer and more accountable online spaces for users. And while the DMA deals with platform competition and regulating unfair practices of gatekeeper platforms, the DSA provides baseline rules and responsibilities for online platforms, digital services, and content. The DSA also formally establishes oversight and an enforcement framework.

STATUS AND TIMELINE

The DMA was proposed in December 2020 and implemented on Nov. 1, 2022. Most of its regulations went into full effect in May 2023. Gatekeepers were officially designated on Sept. 6, 2023, and are required to comply with the DMA by March 6, 2024.

SCOPE

The DMA applies to major companies/platforms that meet the threshold criteria for size and activities. Three main criteria used to designate gatekeepers are 1) “the company achieves a certain annual turnover in the European Economic Area and it provides a core platform service in at least three EU Member States”; 2) “the company provides a core platform service to more than 45 million monthly active end users established or located in the EU and to more than 10,000 yearly active business users established in the EU”; and 3) “when the company met the second criterion during the last three years.” Note that companies can challenge their designation as a gatekeeper.

On Sept. 6, 2023, the European Commission (EC) named six gatekeepers. These gatekeepers provide 22 designated core platform services. Each of these companies was given 6 months to comply with the list of obligations and prohibitions outlined by the DMA by submitting a report that describes how it will adhere to the act. The six identified gatekeepers are:

• Alphabet (parent company of Google and Android)
• Amazon
• Apple
• ByteDance (parent company of TikTok)
• Meta (parent company of Facebook, Instagram, WhatsApp, etc.)
• Microsoft (parent company of LinkedIn)

Ten core types of platform services are covered under the DMA. These services are highly concentrated and are “gateways” that businesses go through to reach their customer base. In addition, gatekeepers set terms and conditions on their own without substantial oversight. The concern stemming from this unchecked power helped to identify the 10 types of services, which are:

• Online intermediation services (e.g., Amazon Marketplace, Google Play, and Meta Marketplace)
• Online search engines (e.g., Google Search)
• Online social networking services (e.g., Facebook, TikTok, and LinkedIn)
• Video-sharing platform services (e.g., YouTube)
• Number-independent interpersonal communication services (e.g., WhatsApp)
• Operating systems (e.g., Android, iOS, and Windows)
• Cloud computing services (e.g., Amazon Web Services)
• Advertising services (e.g., Google and Amazon)
• Web browsers (e.g., Safari and Chrome)
• Virtual assistants (e.g., Siri and Alexa)

OBLIGATIONS AND PROHIBITIONS

The six gatekeepers must comply with the obligations and prohibitions (aka do’s and don’ts) set forth in the DMA. Obligations include:

• Enabling compatibility and interoperability between the gatekeeper’s services and third-party services in certain cases
• Providing business users with access to the data they produce when utilizing the gatekeeper’s platform
• Supplying advertisers and/or publishers with the necessary tools and information to independently verify their ads hosted by the gatekeeper
• Allowing business users to promote their offers and close deals with customers through channels outside of the gatekeeper’s platform

Prohibitions include:

• Prioritizing or ranking the gatekeeper’s own services and products higher than similar offerings from third parties on their platform
• Impeding consumers from connecting to businesses outside of their platforms
• Stopping users from uninstalling any pre-installed programs or applications if desired
• Tracking end users outside the gatekeeper’s main platform to target ads without acquiring explicit consent

OVERSIGHT AND ENFORCEMENT OF NONCOMPLIANCE

The EC has authority to enforce DMA rules, with fines up to 10% of a company’s annual revenue for violations. Additionally, repeated violations can increase the fine to 20%. There is also a provision in place to allow for periodic penalty payments of up to 5% of the average daily turnover.

Outside of monetary fines, the EC has the authority to implement additional solutions as it sees fit, as long as they are proportionate to the infringement. Solutions could include requiring the gatekeeper to sell a business (or parts of it) or banning the gatekeeper from taking on new services related to the offending systemic noncompliance. Cases against identified gatekeepers are publicly available to review and are kept current on the EC’s site as decisions or updates are made.

MOVING FORWARD

The EC calls the DMA “one of the centrepieces of the European digital strategy,” alongside the DSA. Going forward, the legislation seeks to facilitate fair access to key platform services and allow alternative providers to compete on level terms, spurring more innovation. Ultimately, the DMA’s goal is to rein in gatekeeper power and foster open, contestable digital markets benefiting European consumers and businesses.

SOURCES

The Digital Markets Act
eu-digital-markets-act.com

Digital Markets Act: Commission Designates Six Gatekeepers
ec.europa.eu/commission/presscorner/detail/en/ip_23_4328

The Digital Markets Act: Ensuring Fair and Open Digital Markets
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 Case Search > Gatekeepers
digital-markets-act-cases.ec.europa.eu/gatekeepers

Text of the Digital Markets Act
eur-lex.europa.eu/eli/reg/2022/1925

Text of the Digital Services Act
eur-lex.europa.eu/eli/reg/2022/2065