The EU Digital Markets Act- What do you need to know?
08 January 2024
08 January 2024
The Ashurst Emerging Tech Series is a collection of briefings compiled by our UK and European Digital Economy Transactions team, designed to help businesses understand and prepare for the impacts of new and incoming digital services and emerging tech legislation.
In our third briefing, we consider the EU Digital Markets Act (DMA).
The DMA aims to make the market for digital services in the EU fairer, more innovative and more competitive. It is hoped that the DMA will level the digital services playing field and allow challenger providers to get a footing in the market, ultimately benefitting consumers.
|What does the DMA do?
|When does the DMA take effect?
|Who does the DMA apply to?
The DMA places pro-competition obligations on core platform operators (such as social media platforms, marketplaces or search engine operators) which have market dominance.
Whether a platform operator has market dominance is assessed according to certain revenue and user thresholds. The DMA works alongside already established EU competition rules.
The DMA entered into force in November 2022, became broadly applicable from May 2023 and will be completely in force by March 2024.
Like the GDPR, the DMA has an extra-territorial effect, applying to companies who provide services in the EU, regardless of where such companies are based.
The DMA sits alongside the EU Digital Services Act (DSA). You can read our article on the DSA here.
The DMA sets out criteria for a company to be designated as a 'gatekeeper', where it:
1. provides 'a core platform service’ (see diagram below) which serves as an 'important gateway for business users to reach end users'. This will be presumed where it provides such a service that in the last financial year has:
2. has 'a significant impact' on the internal EU market. This will be presumed where the company has:
3. enjoys 'an entrenched and durable position in its operations, or it is foreseeable that it will do so in the near future. This will be presumed where the monthly active end users and yearly active business users above are met in each of the last three financial years.
Gatekeepers currently designated by the EU Commission
In September 2023, the EU Commission designated the following companies as having gatekeeper status:
These designated gatekeepers were deemed to operate the following core platform services:
The DMA sets out a defined list of obligations for gatekeepers, which we have set out below.
These obligations relate primarily to designated core platform services – however, some obligations do go further and impact other digital products and services provided by a gatekeeper where such gatekeeper leverages its gateway position. These other digital products and services are often provided together with, or in support of, the gatekeeper's core platform service.
1. Fair rankings
To ensure a fairer playing field, gatekeepers must not:
2. Interoperability of messaging services
As noted above, Whatsapp and Messenger are currently designated as core platform messenger services. Significant interoperability obligations are imposed on core platform messenger service providers, including to ensure free of charge that:
This functionality is to be deployed by Whatsapp and Messenger by 6 March this year. Any core platform messenger service providers that are designated after this date and allow their users to send end-to end text messaging, images, voice messages and videos between users will be required to deploy this functionality on designation.
This functionality is to be deployed by Whatsapp and Messenger by 6 March 2026. Any core platform messenger service providers that are designated after this date and allow their users to send end-to end text messaging, images, voice messages and videos in a group will be required to deploy this functionality within two years of designation.
This functionality is to be deployed by Whatsapp and Messenger by 6 March 2028. Any core platform messenger service providers that are designated after this date and allow their users to send end-to end text messaging, images, voice messages and videos in a group will be required to deploy this functionality within four years of designation.
3. Interoperability of operating system and virtual assistance hardware and software
Gatekeepers who provide core platform operating systems (currently Google Android, iOS and Windows PC OS) or core platform virtual assistance (of which there are none currently designated) are required to provide third party service and hardware providers with free of charge access to the hardware and software features that those operating / virtual assistance platforms access or control.
4. Business users' data
Subject to certain narrow exemptions, unless a specific choice is given and the end user has provided consent that complies with the GDPR, a gatekeeper may not:
5. Business users' freedom to do business
A gatekeeper shall:
6. End users' freedom to choose services
A gatekeeper shall:
7. No mandatory use of core platform services
A gatekeeper must not require business users or end users to use any of their services on account of such users using another of the gatekeeper's platforms.
8. Termination of core platform services
A gatekeeper must ensure that the terms of service for terminating core platform services are proportionate and that those services can be terminated without undue difficulty.
9. Freedom to make complaints
Gatekeepers must not prevent or restrict business or end users from making complaints about their non-compliance with applicable laws.
10. Online search engine data
Where a third party online search engine operator makes a request, a gatekeeper must provide data relating to rankings, clicks and views of free and paid for search generated by end users on the gatekeepers online search engine – such information is required to be provided on fair terms.
11. Advertising metrics and review tools
A gatekeeper shall provide advertisers and publishers with access information about the online advertising services that the gatekeeper provides, including:
|Periodic Penalty Payments
|The EU Commission can issue fines to gatekeepers of up to 10% of the company's total worldwide annual turnover – or up to 20% in the event of repeated infringements of the DMA.
|The EU Commission can issue periodic fines to gatekeepers of up to 5% of their average daily turnover.
|In cases of systematic infringement (i.e. at least three violations in eight years), additional remedies may be enforced by the EU Commission after a market investigation.
Such remedies need to be proportionate to the offence committed. If necessary and as a last resort option, non-financial remedies can be imposed. These can include behavioural and structural remedies, e.g. the divestiture of (parts of) a business.
Companies which have been designated as gatekeepers must ensure their platform services become compliant with the DMA by 6 March this year. Other companies which have the potential to be designated as gatekeepers should continue to monitor developments of the DMA - specifically, how current gatekeepers are approaching compliance and the outcomes of submissions by gatekeepers who challenge their designation as such under the DMA.
Gatekeepers may also be subject to the competition rules which are incoming in the UK under the Digital Markets, Competition and Consumers Bill (DMCC) if they provide relevant digital services and undertake business in the UK. The DMCC proposes to confer 'Strategic Market Status' on certain digital services providers if they meet certain revenue and active user thresholds. The DMCC was confirmed in the King's speech on 7 November 2023 as being a key agenda item for the new Parliamentary session.
A number of gatekeepers are also likely to be considered very large online platforms (VLOPs) or very large online search engines (VLOSEs) under the DSA and may therefore be subject to the various obligations applicable to providers of intermediary services (as defined in the DSA).
Authors: Rafael Baena, Partner; Aimi Gold, Senior Associate; Siân Deighan, Associate; Hana Byrne, Trainee Solicitor