Digital Markets Act: rules for digital gatekeepers to ensure open markets enter into force

The EU Digital Markets Act (DMA) entered into force on 1 November. The new Regulation will put an end to unfair practices by companies that act as gatekeepers in the online platform economy. It was proposed by the Commission in December 2020 and agreed by the European Parliament and the Council in record-time, in March 2022.

The DMA defines when a large online platform qualifies as a “gatekeeper”. These are digital platforms that provide an important gateway between business users and consumers – whose position can grant them the power to act as a private rule maker, and thus creating a bottleneck in the digital economy. To address these issues, the DMA will define a series of obligations they will need to respect, including prohibiting gatekeepers from engaging in certain behaviours. 

Designating gatekeepers

Companies operating one or more of the so-called “core platform services” listed in the DMA qualify as a gatekeeper if they meet the requirements described below. These services are: online intermediation services such as app stores, online search engines, social networking services, certain messaging services, video sharing platform services, virtual assistants, web browsers, cloud computing services, operating systems, online marketplaces, and advertising services.

There are three main criteria that bring a company in the scope of the DMA:

1. A size that impacts the internal market: when the company achieves a certain annual turnover in the European Economic Area (EEA) and it provides a core platform service in at least three EU Member States;
2. The control of an important gateway for business users towards final consumers: when 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;
3. An entrenched and durable position: in the case the company met the second criterion during the last three years.

More information on the procedure of designating gatekeepers is available in the Questions and Answers on the DMA. 

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A clear list of “do’s and don’ts”

The DMA establishes a list of do’s and don’ts that gatekeepers will need to implement in their daily operations to ensure fair and open digital markets. These obligations will help to open up possibilities for companies to contest markets and challenge gatekeepers based on the merits of their products and services, giving them more space to innovate.

When a gatekeeper engages in practices, such as favoring their own services or preventing business users of their services from reaching consumers, this can prevent competition, leading to less innovation, lower quality and higher prices. When a gatekeeper engages in unfair practices, such as imposing unfair access conditions to their app store or preventing installation of applications from other sources, consumers are likely to pay more or are effectively deprived of the benefits that alternative services might have brought.

The focus of the European Commission’s attention is on the set of companies that may engage in abusive conduct by reason of their market position and the size of their business in the EU, in what the DML refers to as ‘basic platform services’ (BPS), namely in ten cases, for which a prominent provider can be quickly identified: 1) online intermediation, 2) internet search engine, 3) social networking, 4) video sharing platform, 5) unnumbered access communications services, 6) connected device operating systems, 7) internet browsers, 8) connected virtual assistants, 9) cloud computing services, and 10) internet advertising and advertising intermediation services, which is the corollary of converting the use, membership or subscription to some of the above services into revenue.

The DML will apply in all EU Member States as of 2 May next, and the authority must be notified by BSS providers of this status, for which ones and in which part of the EU territory (the transnational nature of the provision of services is a determining factor for the application of the DML), so that designation as gatekeepers for the relevant platforms can take place (either on the basis of objective conditions and communicated by the entity itself or as a result of an investigation by the European Commission) no later than 6 September and the entities that are so designated must adapt their conduct to the requirements of the DML as of 6 March 2024 so that, subject to certain obligations and prohibitions – subject to possible review or extension on the basis of possible market investigations – they can be designated as gatekeepers, to ensure that the same issues of fairness and contestability that underpin the DML are addressed in the circumstances – will, for example, have to ensure that end-users can easily cancel their subscriptions to BSSs or easily uninstall those pre-installed by device manufacturers, stop the installation of default apps alongside the operating system, provide professional users with ad performance data and ad pricing information, allow developers to use alternative payment systems embedded in apps, or allow end-users to download alternative app shops.

SOURCE:

Press release – European Commission

Press release – ElEconomista