CN03 - The Digital Markets Act - new EU rules approved for Big Tech gatekeepers

After reaching a provisional agreement on the Digital Markets Act earlier this year, the European Parliament and Council formally adopted the regulation in July 2022. The Act imposes far-reaching obligations and prohibitions on large online platforms acting as "gatekeepers", to ensure a level playing field in digital markets.

Key takeaways

• The Digital Markets Act provides for the forward-looking regulation of Big Tech, in a shift away from backward-looking enforcement under EU antitrust rules.
• Large online platforms may be designated as "gatekeepers" and will need to ensure compliance with stringent behavioural requirements (e.g. no self-preferencing, ensuring interoperability, easy uninstallation of software/apps).
• The European Commission is expected to begin to designate gatekeepers from mid-2023; designated platforms will then have six months to comply with the new obligations.

The Digital Markets Act ("DMA"), developed in parallel with the Digital Services Act, forms part of a package of EU measures targeting the digital space. 

Gatekeeper status

The DMA applies to designated "gatekeepers" - providers of "core platform services" (e.g. search engines, social networks, online marketplaces and web browsers) that are important gateways for businesses to reach end-users, and which have an "entrenched and durable position". Platforms with a significant impact on the internal market are caught. 

The DMA establishes a process for the Commission to designate gatekeepers. Platforms which exceed certain quantitative thresholds (including EU turnover of €7.5 billion or a market capitalisation of €75 billion, and 45 million active monthly end users and 10,000 active business users in the EU) are presumed to be gatekeepers, and must proactively notify the Commission. Gatekeeper status will be regularly reviewed, at least every 3 years.

Key dos/don'ts for gatekeepers

Dos

• Interoperability: gatekeepers must enable interoperability of certain systems and messaging services with those of rivals free of charge.
• Ease of uninstallation: gatekeepers must ensure that end users can easily uninstall any software application on the gatekeeper's operating system.
• Data portability: gatekeepers must offer end users the possibility to transfer their data to other platforms.
• Notify digital mergers: gatekeepers must notify any intended digital or data-related mergers and acquisitions to the Commission.

Don'ts

• No MFNs: online intermediation services must not restrict business users from offering the same products/services to end users at different prices/conditions on other platforms or their own websites.
• No self-preferencing: gatekeepers may not treat their own products/services more favourably than similar products/services of a third party.
• No spill-over of platform data: data collected by the gatekeeper from business users must not be used by the gatekeeper to compete with those users.
• No tying: end users or business users must not be required to use or interoperate with a web browser engine or a payment service of the gatekeeper.

The Commission may sanction non-compliance with fines of up to 10% of total worldwide turnover (20% in case of repeated non-compliance).

Next steps

The DMA is expected to enter into force around October 2022. Following a six month transitional period (i.e. Spring 2023), the notification obligations will commence and the Commission will begin to designate platforms as gatekeepers. Designated gatekeepers will have six months to comply with the DMA. 

Comment

Gatekeeper platforms will need to adapt to these new rules rapidly although the scope of these requirements and how they will apply in practice is still unclear. The Commission is expected to adopt an implementing regulation which should provide further clarity on the requirements of the DMA, in particular, the interoperability requirement. 

The DMA provisions are highly technical and will undoubtedly create significant operational challenges for gatekeeper platforms. However, many of the DMA's requirements are inspired by past EU or national case-law concerning abuse of dominance by Big Tech (e.g. Google Shopping, App Store, Booking.com) and are therefore not completely unfamiliar to the industry. Indeed, this may give rise to further complexity, including the risk of conflicting decisions and double jeopardy due to the concurrent competition law powers of national authorities.

With thanks to Astrid Dorigny-Sicard of Ashurst for her contribution.