The time has come for the Digital Markets Act (DMA) of the EU. From today, November 2022st XNUMX, the new regulation enters into force to combat the unfair practices implemented by the large online platforms, called "gatekeepers", that is, the Big Tech – in particular US companies such as Amazon, Google, Microsoft, Apple and Facebook – which lead to distortions of competition. The new European Directive was proposed by the Commission in December 2020 and approved by the European Parliament and the Council in record time, in March 2022.
The reform joins the twin provision of the Digital Services Act (DSA), approved on 5 July 2022, which essentially aims to affirm the principle according to which what is illegal offline must also be illegal online. The two measures make up the Digital Services Packages, which will become executive from 2023. But let's see how the Digital Markets Act works.
Digital Markets Act: what it is and how it works
The DMA defines when a major online platform qualifies as a "gatekeeper". It's about digital platforms which constitute an important gateway between business users and consumers, whose location can empower them to act as a private regulator, thus creating a bottleneck in the digital economy. To address these problems, the DMA defines a series of obligations that they will have to comply with, including a ban on gatekeepers from adopting certain behaviours.
Who are the gatekeepers?
Companies operating one or more of the so-called “core platform services” listed in the DMA qualify as gatekeepers if they meet the requirements described below. These services are: online intermediary services such as app stores, online search engines, social networking services, some messaging services, video sharing platform services, virtual assistants, web browsers, cloud computing services, operating systems, online marketplaces and services advertisers.
They are three main criteria which bring a company within the scope of the DMA:
- A dimension that has an impact on the internal market: when the company achieves a certain annual turnover in the European Economic Area (EEA) and provides a core platform service in at least three EU member states.
- The control of a major gateway for business users to end consumers: when the company provides a core platform service a more than 45 million active end users monthly established or located in the EU ea more than 10.000 active commercial users annually established in the EU; a consolidated and lasting position: in case the company has satisfied the second criterion in the last three years.
- More information on the gatekeeper designation process can be found in Questions and answers on the DMA.
Digital Markets Act: Do's and Don'ts
The DMA establishes a list of do's and don'ts that gatekeepers will need to implement in their day-to-day operations to ensure fair and open digital markets. These obligations will help open up opportunities for companies to compete in markets and challenge gatekeepers on the merits of their products and services, giving them more room to innovate.
When a gatekeeper engages in unfair practices, such as imposing unfair terms of access to their own app store or prevent the installation of applications from other sources, consumers are likely to pay more or be effectively deprived of the benefits that alternative services could have brought.
The next steps
With its entry into force, the DMA will enter the crucial phase of implementation and will start to be applied in six months, starting from May 2 2023. Subsequently, within two months and at the latest by 3 July 2023, potential gatekeepers will have to notify the Commission of their main platform services if they meet the thresholds set by the new regulation.
Once the complete notification has been received, the Commission will have 45 working days to assess whether the company in question meets the thresholds and to designate it as gatekeeper (for the latest possible submission, this will be by 6 September 2023). Once designated, gatekeepers will have six months to comply with the requirements of the DMA, at the latest by March 6, 2024.
To prepare for the application of the DMA, the Commission is already proactively engaging with industry stakeholders to ensure effective compliance with the new rules. Furthermore, in the coming months, the Commission will organize a series of technical workshops with stakeholders to evaluate third-party views on compliance with gatekeepers' obligations under the DMA. The first of these workshops will be held on 5 December 2022 and will focus on the “self-preference” arrangement.
Finally, the Commission is also working on an implementing regulation containing provisions on the procedural aspects of notification.
What happens in case of infringement?
In case of infringement of the law on digital markets, the Commission will be able to impose sanctions and fines of up to 10% of a company's worldwide turnover and up to 20% for repeat offenders.
