The Digital Markets Act: Far-reaching obligations for Big Tech companies, far-reaching opportunities for online companies.
The Digital Markets Act (“DMA“) represents a (r)evolution for the regulation of Big Tech companies in the EU. Where Big Tech companies (or so-called Gatekeepers – see below) will be severely regulated, far-reaching opportunities arise for all companies using the services of the Gatekeepers.
Traditionally, the power of Gatekeepers is curbed by (supra)national competition laws. However, since EU competition law (i) has been facing difficulties with new business models, (ii) is slow to react, and (iii) is re-active or ex post in nature, the EU issued the new DMA. The DMA provides a set of harmonized self-regulating rules curtailing the power of Gatekeepers for the use of their Core Platform Services (see below), thus enabling businesses in the digital sector to differentiate prices, boost marketing and analytics, use the hardware and software of the Gatekeepers to improve their products/services, etc.
In order to understand the impact of the DMA, two definitions are indispensable, i.e.:
- It is applicable to Gatekeepers: companies with a durable and significant impact on the internal market and providing Core Platform Services reaching 45 million end users (monthly) and 10,000 business users (annually). Even when the Gatekeepers are yet to be designated by the Commission, the most likely Gatekeepers are Google (Alphabet), Amazon, Apple, Microsoft, Facebook (Meta), etc.;
- Core Platform Services: individual services which the Gatekeepers are reputable for, e.g. online marketplaces; search engines; social networks; video-sharing platforms; operating systems; web browsers; virtual assistants; cloud computing; online advertising services.
The Gatekeepers will be designated in September 2023. Where most of the obligations on Gatekeepers will become applicable as of March 2024, some Gatekeepers have already implemented the DMA in their Core Platform Service(s) and companies will already be able to benefit thereof today.
The DMA imposes a harmonized set of rules applicable to Gatekeepers when offering Core Platform Services to (business) users, including, inter alia:
| Obligation for the Gatekeeper | Examples of benefits for business users |
| Use of data
Gatekeepers cannot compete with business users based on the use of non-public data generated by these business users, who are providing their services via the Core Platform Service (data includes click, search, view and voice data);
Gatekeepers will provide business users free of charge with effective, high-quality, continuous and real-time access to (personal) data generated from the use of the Core Platform Services by the business users.
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A Gatekeeper who has an online marketplace, but who is also a retailer, cannot use the data generated by a retailer who offers its products via the Gatekeeper’s online marketplace.
Enable business users to make optimal use in the data generated by end user. |
| Commercial relations
Gatekeepers cannot not prevent business users from offering their products or services at different prices or conditions via different channels, e.g. own websites or third party platforms;
Gatekeepers will allow business users to promote offers and conclude contracts with end users, regardless of whether they use the Core Platform Services of the Gatekeeper for this purpose.
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Business users can offer better deals to their customers, diverting traffic from the Gatekeepers’ platform to their own website or third party websites.
Business users are free to promote and choose the distribution channel that they consider most appropriate.
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| Tying
Gatekeepers cannot require (end users and) business users to use its identification service, web browser engine or payment service for services offered via that Gatekeeper’s Core Platform Services;
Gatekeepers cannot require business users or end users to subscribe to any other Core Platform Services in order to use the intended Core Platform Services.
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Business users are free to use the identification service, web browser engine or payment service of their choosing, e.g. payment services for in-app purchases.
Avoid lock-in of business users (and end-users). Business users can have access to one intended Core Platform Service, without the obligation to commit to another. |
| Transparency
Gatekeepers will provide, on a daily basis and free of charge, information to online advertisers and publishers on prices paid by advertisers, remuneration received by the publishers and the basis for calculation thereof;
Gatekeepers will provide advertisers and publishers, free of charge, with access to the performance measuring tools and the data necessary to carry out their own independent verification, including aggregated and non-aggregated data.
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Advertising services to online advertisers and publishers are often non-transparent and opaque, undermining their ability to switch to another provider of online advertising services.
Enable online advertisers and publishers to carry out their own independent verification of their online advertising efforts. |
| Mobile ecosystem
The Gatekeeper will enable the use of third-party software or app stores and allow them to be accessed by means other than the relevant Core Platform Service.
The Gatekeeper will allow providers of services and hardware with effective interoperability with the Gatekeeper’s hardware and software.
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An Iphone user will be able to install the android app store, making available software that might not be available in the Apple app store. Software/apps/games can also be made available via de companies own website.
A business user can make use of the hardware/software of the Gatekeeper for its own services or products, e.g. use the NFC chip in an Iphone. |
| (Un)fair practices
The Gatekeeper will not rank its services and products more favorably than similar services or products of a third party. The Gatekeeper shall apply transparent, fair and non-discriminatory conditions to such ranking;
The Gatekeeper will apply fair, reasonable, and non-discriminatory general conditions of access for business users.
The Gatekeeper shall not have disproportionate general conditions for terminating access to the Core Platform Service. |
End users using google as a search engine also receive the google products on top of the ranking, this to the detriment of business users offering similar products or services.
Access and non-discriminatory termination of access to the Core Platform Services is essential for online business users who often heavily rely on sales via the Gatekeeper’s platform. |
Failure of a Gatekeeper to comply with aforementioned obligations could lead to fines up to 10-20% (first offence – repeat offences) of the annual worldwide turnover in the preceding financial year.
The DMA complements the Digital Services Act, which regulates fair practices and liability of intermediary services, e.g. from companies providing WiFi hotspot to guests and VPN services to access the company network, to intermediary services offered by Very Large Online Platforms or Search Engines. Online advertisers too will indirectly be affected as they will be caught by transparency obligations on online platforms. Please find a blogpost on the Digital Services Act here.
In summary, Gatekeepers will have to prepare for the upcoming obligations imposed by the DMA, while companies present in the digital space need to verify whether they should modify their approach to market before March 2024. In order to prepare your company for the DMA, EY Law can advise your company on the possibilities under the DMA, e.g.:
- differentiate prices via different channels
- boost marketing and data analytics
- use the hardware and software of the Gatekeepers to improve your products/services
- get insight on the pricing for online advertisement
- review access/termination of access to the Core Platform Services
- how to react to non-compliance of a Gatekeeper;