The EU has given its final approval on new rules for a fair and competitive digital sector through the Digital Markets Act (DMA).
Despite the mounting controversy around the DMA and its interplay with existing EU competition and privacy rules, the EU approval arrived with relative speed. Just like with GDPR, the EU succeeds is being a trend setter in global regulation of digital markets. The DMA is anticipated to be a first of its kind and a source of inspiration also for other jurisdictions, such as the delayed UK digital markets unit regulations.
The DMA is intended to ensure a digital level playing field that establishes ex ante rights and rules for large online platforms (‘gatekeepers’). Under the DMA, gatekeepers will have to:
- ensure that unsubscribing from core platform services is just as easy as subscribing
- ensure that the basic functionalities of instant messaging services are interoperable, i.e. enable users to exchange messages, send voice messages or files across messaging apps give business users access to their marketing or advertising performance data on the platform
- inform the European Commission of their acquisitions and mergers
In addition, gatekeepers will no longer be able to:
- rank their own products or services higher than those of others (self-preferencing)
- pre-install certain apps or software, or prevent users from easily un-installing these apps or software
- require the most important software (e.g. web browsers) to be installed by default when installing an operating system prevent developers from using third-party payment platforms for app sales
- reuse private data collected during a service for the purposes of another service
If a large online platform is identified as a gatekeeper, it will have to comply with the rules of the DMA within six months. The definition of gatekeeper is intended to capture so called Big Tech companies but other large companies active in digital markets may also fall within the scope of the new regulations.
The DMA comes with sharp teeth. If a gatekeeper violates the rules laid down in the DMA, it risks a fine of up to 10% of its total worldwide turnover. For a repeat offence, a fine of up to 20% of its worldwide turnover may be imposed. If a gatekeeper systematically fails to comply with the DMA, i.e. it violates the rules at least three times in eight years, the European Commission can open a market investigation and, if necessary, impose behavioural or structural remedies.
The DMA is part of a package of measures proposed by the European Commission to introduce more competition in digital markets and protect consumers, while promoting data mobility and interoperability. It will be interesting to see how the DMA requirements fit in the overall puzzle of, and interplay with, sometimes overlapping obligations under other existing and proposed statutes. For example, the DMA interoperability requirements applicable to instant messaging platforms echo interoperability requirements found in EU competition law precedents as well as the EU Electronic Communications Code.
After being signed by the President of the European Parliament and the President of the Council, the DMA will be published in the Official Journal of the European Union and will start to apply six months later.
A more detailed analysis of the DMA will follow in due course. In the meantime, if you have any questions, please visit our Digital Markets Regulation webpage, available here