On 2 May 2023, the Digital Markets Act (DMA) will start to apply. By imposing a sweeping set of requirements that large online platforms should abide by, it heralds a new era of digital regulation and competition law enforcement in Europe.
The DMA aims to end unfair practices by companies that function as “gatekeepers” in the online platform economy and seeks to promote fair and contestable digital markets, to the benefit of business users and consumers. It is one of two legislative initiatives proposed by the European Commission in its Digital Services Package of December 2020, together with the Digital Services Act (DSA).
The DMA will apply in parallel with EU and national competition law rules. Its hence brings about an important shift from mere ex-post antitrust intervention (where concerns are tackled after an anti-competitive practice has taken place) to ex-ante regulation (where very concrete obligations and prohibitions are imposed in advance).
What is a gatekeeper?
Central in the DMA is the notion of "gatekeeper". A gatekeeper is an undertaking that offers one or more “core” platform services. These include, for instance, online intermediation services, operating systems, advertising services, cloud computing services, virtual assistants, online social networking services, video-sharing platform services, and others.
To qualify as a gatekeeper, undertakings that offer one of these core platform services should meet three cumulative requirements.
- First, they should have a significant impact on the internal market. This is presumed if a company’s annual Union turnover is €7.5 billion or more, or where its average market capitalisation amounts to at least €75 billion in the last financial year. Moreover, the company should provide its core platform service in at least three EU Member States.
- Second, the platform service should be an important gateway for business users to reach consumers. This is presumed if, in the last financial year, the company provides this service to more than 45 million monthly active end users and more than 10,000 annual active business users in the EU.
- Third, the company should enjoy an entrenched and durable position in its operations. This is presumed if it met the second requirement for the past three financial years.
Which do’s and don’ts are imposed on gatekeepers?
Undertakings qualified as gatekeepers must respect a set of obligations and prohibitions, so-called do’s and don’ts. The relevance of these requirements is strongly dependent on the type of service that they offer.
On the one hand, gatekeepers are required to, for example:
- allow business users to access the data they generate when using the gatekeeper’s platform, and to promote their offer and conclude contracts with customers outside of the platform;
- enable third parties to inter-operate with the gatekeeper's own services;
- provide companies that advertise on their platforms with access to performance measuring tools and to information that enables them to carry out their own independent verification of such advertisements;
- ensure that end-users can easily unsubscribe from core platform services, and that they can install third party apps or app stores using the gatekeeper’s operating system.
On the other hand, gatekeepers are prohibited from, for instance:
- tracking end users outside of the core platform service for the purpose of targeted advertising, without their effective consent;
- treating their own services and products more favourably than similar services or products offered by third parties;
- using business users’ data when competing with them;
- obliging app developers to use certain gatekeeper services if they wish to appear in its app stores.
Evidently, it remains to be seen how these requirements will be interpreted and applied in practice, and which effect they will have on ongoing and future antitrust investigations. The Commission is organizing several workshops with stakeholders to address questions that may arise on the implementation of the DMA’s new measures.
What about timing?
The 2nd of May 2023 marks the beginning of the notification and review process through which the Commission will designate companies as gatekeepers. By 3 July 2023, undertakings offering core platform services that meet the above thresholds must notify the Commission and provide it with relevant information on its gatekeeper status. Importantly, in their notification, companies may also present substantiated arguments to demonstrate that they do not satisfy the gatekeeper requirements.
Within 45 working days after receiving a company’s submission, the Commission must decide on its gatekeeper status. Following this decision, designated gatekeepers will have six months to ensure they comply with the DMA’s requirements, with a final compliance deadline on 6 March 2024.
Who will enforce this?
The Commission will enforce the DMA in close cooperation with the authorities of EU Member States. Fines can be imposed of up to 10% of an undertaking’s total annual global turnover, or up to 20% for repeated infringements.
In case of systematic infringements, the Commission can impose additional remedies that are proportionate to the offense committed. As a “last resort” option, an undertaking can be subjected to non-financial remedies, including behavioural and structural remedies such as divestments.
What if I interact with a gatekeeper?
In addition to the Commission’s public enforcement, affected businesses and end-users can spur the DMA’s implementation by instigating private enforcement actions. If gatekeepers fail to comply with the DMA’s requirements, such infringements can be challenged before national courts.
While the DMA’s text contains only limited references to private enforcement, it nevertheless highlights the role of Member States’ courts in safeguarding the right of business- and end-users to raise concerns about possible infringements. Moreover, a cooperation procedure is foreseen between national courts and the Commission whenever national courts enforce the DMA.
Given the DMA’s limited guidance thereon, private enforcement actions will be subject to the law of the Member State where the action is brought. Germany is the first Member State to propose more detailed rules for this purpose. Undoubtedly, other countries will follow suit.
Protecting competition in the digital age
The DMA is but one of many digital regulations adopted or proposed in the European Union over the past few years. Its imminent enforcement marks an era of heightened scrutiny of technology companies on the European market, regardless of their place of establishment.
While this new approach to digital regulation must still earn its stripes, the EU’s efforts are already inspiring regulators across the globe and demonstrate Europe’s strong desire to safeguard competition in the digital age.
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