Digital Markets Act
The Digital Markets Act is an EU regulation that aims to make the digital economy fairer and more contestable. The regulation entered into force on 1 November 2022 and became applicable, for the most part, on 2 May 2023.
The DMA aims to ensure a higher degree of competition in European digital markets by preventing large companies from abusing their market power and by allowing new players to enter the market. This regulation targets the largest digital platforms operating in the European Union. They are also known as "gatekeepers" due to the "durable" market position in some digital sectors and because they also meet certain criteria related to the number of users, their turnovers, or capitalisation. Twenty-two services across six companies – Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft – were identified as "core platform services" by the EU in September 2023.
These companies had until 6 March 2024 to comply with all of the Act's provisions.
The list of obligations includes prohibitions on combining data collected from two different services belonging to the same company ; provisions for the protection of platforms' business users ; legal instruments against the self-preferencing methods used by platforms for promoting their own products ; provisions concerning the pre-installation of some services ; provisions related to bundling practices; and provisions for ensuring interoperability, portability, and access to data for businesses and end-users of platforms. There are also provisions to ensure the end user can remove any pre-installed software. Non-compliance may lead to sanctions, including fines of up to 10% of the worldwide turnover.
According to the European Commission, the main objective of this regulation is to regulate the behaviour of the so-called "Big Tech" firms within the European Single Market and beyond. The Commission aims to guarantee a fair level of competition on the highly concentrated digital European markets, which are often characterised by a "winner takes all" configuration.
The DMA covers eight different sectors, which it refers to as Core Platforms Services. Due to the presence of gatekeepers who, to a certain degree, affect the market contestability, the CPS are considered problematic by the European Commission:
- online search engines ;
- online intermediation services ;
- social networks ;
- video sharing platforms ;
- communication platforms ;
- advertising services ;
- operating systems ;
- cloud services.
Background
EU Competition policy rules
The present rules applied within the European Union with regard to digital markets are derived from European and national legislation. Under these circumstances, the basis for competition rules in the EU is established by Articles 101 and 102 of the Treaty on the Functioning of the European Union. Article 101 addresses anti-competitive agreements and concerted practices that may affect trade between members states or reduce competition in the common market. Article 102 aims to tackle the abuse of dominant positions. All players operating in the common market are therefore subject to these provisions. European and national authorities have identified the need to strengthen the current legislation, given the structural problems that are not covered.Digital policy in the EU
The Digital Markets Act is in line with the legislative developments undertaken by the Juncker Commission between 2014 and 2019.One of the most important pieces of EU digital legislation is represented by the EU copyright rules. This has led to the protection, payment, and recognition of workers in thirty-three sectors and it aims to reward creativity, stimulate investment in the creative sector. Another relevant achievement can be considered the implementation of the General Data Protection Regulation in 2016. This regulation sets out the new European framework for the use and circulation of personal data and has a significant impact on the major digital players. In addition, the regulation on platform-to-business trading practices has been established to create a fair, transparent and predictable business environment for smaller businesses and traders on online platforms. This regulation has applied in July 2020 and prevents market distortion, encourages healthy competition and prohibits unfair practices.
Legislative procedure
The Digital Markets Act proposal was submitted by the European Commission to the European Parliament and to the Council of the European Union on 15 December 2020. Along with the Digital Services Act , the DMA is part of the commission's European Digital Strategy entitled Shaping Europe's Digital Future. The proposals were presented by the Executive Vice President of the European Commission for A Europe Fit for the Digital Age, Margrethe Vestager, and by the European Commissioner for Internal Market, Thierry Breton, as members of the Von der Leyen Commission.On 23 November 2021, the Parliament's Committee on the Internal Market and Consumer Protection adopted its position on the DMA proposal, and the text was adopted in plenary session of the European Parliament on 15 December 2021. The approved text became the Parliament's mandate for negotiations with the council, which started under the French presidency of the Council in the first half of 2022. On 25 November 2021, the Council agreed its negotiating position, providing the Presidency with a mandate for the discussions.
On 24 March 2022, the Parliament and the Council meeting in the trilogue format together with the Commission reached a political agreement on the DMA. The negotiators reached a consensus on the interoperability provisions for large messaging platforms: the said obligations will make it possible for users to communicate between different platforms, giving them more choice against the increasing dominance of certain companies. The choice is expanded also through provisions that guarantee users' free choice as regards browsers, virtual assistants or search engines, while no interoperability obligation for social networks has been decided upon yet. In the political agreement, platforms with a market capitalization of €75 billion or turnover in the European Economic Area equal to or above €7.5 billion have been included in the rules' scope. An agreement was reached for penalties, which will be amounting from 10% of annual worldwide turnover due to non-compliance for first infringements up to 20% in the case of repeated infringements. The text of the DMA provisionally agreed in March 2022 was made publicly available by the European institutions only on 22 May 2022.
The DMA was formally adopted by the Parliament on 5 July 2022 and by the council on 19 July 2022, and it was signed into law on 14 September 2022 by Presidents of the Parliament and the Council, which concluded the legislative procedure. The adopted text was published in the Official Journal of the European Union on 12 October 2022, setting it to come into force twenty days after the publication, on 1 November 2022.
The 2 May 2023, 6 months later, the regulation started applying and the potential gatekeepers had 2 months to report to the commission to be identified as gatekeepers. This process would take up to 45 days and after being identified as gatekeepers, they would have 6 months to come into compliance, at the latest the 6 March 2024. From 7 March 2024, gatekeepers must comply with the DMA.
Objective
The DMA specifically targets Big Tech companies.The DMA proposed to classify certain platforms, according to their number of users, capitalisation, market power or turnover, probably including Apple, Google, Facebook and Amazon as "Gatekeepers" making them subject to new obligations.
It aims at preventing large companies from abusing their market power and to allow smaller and new players to enter the market.
Critics have suggested that with six of the gatekeepers American and one Chinese, the DMA has been constructed to deliberately target US companies. The European Commission's technology and competition chiefs have responded that it is "not designed to target companies based on nationality".
Rationale
In December 2020, the European Commission released a legislative proposal that intends to protect consumer welfare and to restore a level playing field in the European Union's digital market. At the moment, the economy is being driven to a large extent by the activities conducted through online platforms. A small number of online platforms have come to play a crucial role in the lives of millions of individuals and companies. They intermediate a significant portion of transactions between consumers and businesses, leading to extreme dependencies of many businesses on these important platforms.In the table below, it can be observed that EU digital markets face a high level of concentration, with companies such as Google or Facebook controlling almost the entirety of a specific market segment.
| Sectors | Dominant company | Share of the EU market |
| Desktop OS | Microsoft Windows | 78% |
| Web browsers | Google Chrome | 60% |
| Search | Google Search | 95% |
| Social media | 90% | |
| E-commerce | Amazon | 30% share of users and 60% in terms of market revenues |
| Travel/booking | Booking.com | 35% |
| Video streaming | Netflix, Amazon Prime Video, HBO, Sky and DAZN | 90% of the market revenues |
| Audio streaming | Spotify Apple Music and Amazon Music | 55% 25% |
| Mobile OS | Google Android Apple iOS | 72% 27% |
The term gatekeeper refers to the ability of intermediary platforms to act as the main "bottleneck" to a large number of market participants, that are not reachable elsewhere. Behind this development are market forces that encompass important economies of scale on the supply side; strong direct and indirect network effects on the demand-side; data-driven competitive advantage; high rate of innovation; and development of conglomerates that structure entire ecosystems. In addition, the combination of these elements can lead to market dynamics that follow the "winner-takes-most" scenarios.
During the last years, serious concerns have been expressed by authorities across the world with regard to the economic power of some digital giants. In Europe, the European Commission – backed by years of enforcement experience in EU competition law – has pointed out that a part of those intermediary platforms may be considered "Gatekeeper" or "structuring platforms" in their respective market segments. Moreover, it has also expressed the concern that Big Tech companies might unlawfully take advantage of their market and bargaining powers, in order to lock in dominant positions, to increase their level of influence, and to obtain leading positions in new sectors of activity. Hence, this can be interpreted as providing unfair advantages to the incumbents present in core and ancillary services, as distorting the competition, and as harming the consumers, in the long run, through either increased prices or reduced options. Under EU competition law, reaching a "dominant position" is by no mean considered illegal, nor is the idea of a "winner takes most" scenario. However, practices that lock in dominant positions or that impose unfair conditions, terms to third parties might be treated as unlawful.