The European Union’s ambitious attempt to regulate the digital economy and curb the market power of Big Tech companies is facing a wave of legal challenges from the likes of Google, Amazon, Meta, Apple and Microsoft. The bloc’s Digital Markets Act (DMA), which was adopted in March 2023, introduces a set of obligations and prohibitions for tech firms that are designated as gatekeepers in the EU market. However, some of these firms are not willing to comply with the rules and are preparing to unleash their army of lawyers to contest the DMA in court.
What is the DMA and why is it important?
The DMA is a landmark regulation that aims to create fair and competitive conditions for digital services across the EU. It applies to platforms that have a significant impact on the digital economy, such as search engines, social networks, online marketplaces, app stores and operating systems. These platforms are considered gatekeepers if they meet certain criteria, such as having a turnover of at least €7.5 billion in the last three financial years, providing a platform service with more than 45 million active end-users each month, and having 10,000 yearly active business users.
The DMA imposes a list of dos and don’ts for gatekeepers, such as:
- Not combining user data from different sources without consent
- Not favoring their own services over those of competitors
- Not restricting third-party access to their platforms or data
- Not imposing unfair terms and conditions on users and business customers
- Not preventing users from switching to other platforms or services
- Not using data obtained from business users to compete with them
The DMA also gives the European Commission the power to monitor and enforce the rules, as well as to impose fines of up to 10% of the gatekeepers’ annual worldwide turnover for non-compliance. The Commission can also impose interim measures or structural remedies in case of serious or repeated infringements.
The DMA is seen as a crucial tool to address the market dominance and anti-competitive practices of Big Tech companies, which have been subject to several antitrust investigations and lawsuits in the EU and elsewhere. The DMA is also part of the EU’s broader digital strategy, which includes the Digital Services Act (DSA), the Artificial Intelligence Act (AIA), and the Data Governance Act (DGA).
How are Big Tech companies challenging the DMA?
Some of the Big Tech companies that are likely to be affected by the DMA are not happy with the new rules and are planning to challenge them in court. They argue that the DMA is disproportionate, discriminatory, and violates their fundamental rights. They also claim that the DMA will stifle innovation, harm consumers, and create legal uncertainty.
One of the main points of contention is the process of identifying and designating the gatekeepers, which is expected to start in early 2023. The Commission will have to draw up a final list of firms that fall under the scope of the DMA, based on the criteria and indicators set out in the regulation. However, some of the potential gatekeepers have already challenged the Commission’s preliminary assessment of their status, arguing that they do not meet the requirements or that they operate in different markets.
For example, Google, Amazon, Meta, Apple and Microsoft have filed a lawsuit against the Commission in April 2023, asking the EU’s General Court to annul the Commission’s decision that they are Very Large Online Platforms (VLOPs). This decision, which was issued in December 2022, was based on the DMA’s draft proposal and identified 12 VLOPs that would likely become gatekeepers under the final regulation. The VLOPs were required to provide information to the Commission to facilitate the gatekeeper designation process, but the Big Tech companies argued that this was an unlawful and premature measure that violated their rights of defense and presumption of innocence.
Another point of dispute is the content and scope of the obligations and prohibitions imposed on the gatekeepers by the DMA. Some of the gatekeepers have expressed concerns about the clarity, proportionality, and feasibility of the rules, as well as their impact on their business models and innovation. They have also questioned the Commission’s discretion and authority to enforce the rules and impose sanctions.
For instance, Meta, the parent company of Facebook, Instagram, and WhatsApp, has criticized the DMA for being too broad and vague, and for interfering with its core services and features. Meta has also warned that the DMA could undermine its efforts to protect the privacy and security of its users, as well as to combat misinformation and harmful content. Meta has said that it will challenge any DMA decision that it considers unlawful or unfair in court.
Similarly, Apple has objected to the DMA’s requirement to open up its operating system and app store to third-party apps and services, claiming that this would compromise the quality, security, and privacy of its products. Apple has also accused the DMA of targeting its business model and discriminating against its services, such as Apple Music and Apple Pay. Apple has said that it will defend its rights and interests in court if necessary.
What are the implications and prospects of the legal challenges?
The legal challenges against the DMA could have significant implications for the EU’s digital agenda and the future of the digital economy. The challenges could delay or derail the implementation and enforcement of the DMA, as well as create legal uncertainty and confusion for the gatekeepers, their competitors, and their users. The challenges could also affect the EU’s credibility and influence as a global leader and standard-setter in digital regulation, as well as its relations and cooperation with other jurisdictions that are also grappling with the same issues.
However, the legal challenges are not necessarily doomed to succeed or fail. The outcome will depend on various factors, such as the strength and validity of the arguments, the evidence and data presented, the interpretation and application of the law, and the independence and impartiality of the judges. The legal challenges could also lead to constructive dialogue and compromise between the parties, as well as to clarifications and improvements of the rules. The legal challenges could also stimulate public debate and awareness about the role and impact of Big Tech companies on the digital economy and society.
The DMA is a bold and unprecedented regulation that aims to create a fair and competitive digital market in the EU. It is also a complex and controversial regulation that faces strong opposition and resistance from some of the Big Tech companies that it targets. The DMA is likely to face a long and hard legal battle, but it is also likely to shape and transform the digital landscape for years to come.