The European Union has announced new regulations and investigations that will affect six of the world’s largest technology companies, namely Apple, Amazon, Google, Meta, ByteDance and Microsoft. The EU aims to curb the market power and anti-competitive practices of these digital “gatekeepers” under the Digital Markets Act (DMA).
What is the DMA and who are the gatekeepers?
The DMA is a new set of rules that will apply to companies that operate “core platform services” in the EU, such as search engines, social networks, app stores, messaging platforms, web browsers and operating systems. These platforms should have at least 45 million active monthly users in the EU and a turnover of at least €7.5 billion in the last three financial years or a €75 billion market capitalization. They should also provide a “gateway” for businesses to reach end-users, have a “significant impact” on the EU’s business sector, and have an “entrenched and durable position” in their respective markets.
The EU has designated six companies as gatekeepers under the DMA: Apple, Amazon, Google owner Alphabet, Meta Platforms (formerly Facebook), ByteDance (the owner of TikTok) and Microsoft. These companies operate 22 core platform services that fall within the DMA’s scope. For example, Google has eight core platform services, including Chrome, Android, Search, Play, Maps and YouTube.
What are the obligations and prohibitions for the gatekeepers?
The gatekeepers will have to comply with a list of obligations and prohibitions under the DMA by March 2024. These include:
- Not using data obtained from their business users to compete with them or unfairly advantage their own services
- Not preventing users from uninstalling any pre-installed software or apps
- Not requiring business users to use their identification service or payment system
- Not ranking their own services more favorably than those of their competitors
- Not restricting users from switching between different platforms or services
- Not tying or bundling their core platform services with other services or products
- Not using technical or contractual means to prevent interoperability or data portability
The EU also has the power to impose additional remedies on the gatekeepers if they are found to cause significant harm to competition or consumers. These could include structural or behavioral measures, such as divesting certain businesses or granting access to data or infrastructure.
What are the investigations and sanctions for non-compliance?
The EU has also opened four investigations into some of the gatekeepers’ core platform services, namely Apple’s iMessage service and Microsoft’s Bing, Edge and Advertising businesses. These investigations aim to verify whether these services meet the criteria for being gateways and whether they comply with the DMA’s rules.
If the gatekeepers fail to comply with the DMA’s rules or cooperate with the investigations, they could face fines of up to 10% of their annual worldwide turnover or periodic penalty payments of up to 5% of their daily worldwide turnover. The EU could also impose interim measures or order the suspension of certain practices if there is an urgent need to prevent serious harm.
What are the reactions and implications of the DMA?
The DMA is part of the EU’s broader digital strategy to create a fairer and more innovative digital single market. The EU hopes that the DMA will foster more competition and innovation in the digital sector, as well as protect consumers’ rights and interests online.
The gatekeepers have expressed different reactions to the DMA. Some have welcomed the initiative as a way to create a level playing field and clear rules for everyone. Others have criticized it as being too vague, disproportionate or discriminatory. Some have also argued that they do not qualify as gatekeepers or that some of their services do not fall under the DMA’s scope.
The DMA is expected to have significant implications for the gatekeepers’ business models and operations in Europe and beyond. The gatekeepers may have to change some of their practices or features to comply with the DMA’s rules. They may also face more scrutiny and challenges from regulators, competitors and users. The DMA could also inspire other jurisdictions around the world to adopt similar regulations for Big Tech.
