The European Union has identified six major technology companies that will be subject to the regulations outlined in the Digital Markets Act (DMA). The DMA aims to enforce proactive, pro-competition rules on “gatekeepers” who operate designated “core platform services.” The six companies listed as gatekeepers are Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft.
The European Union has identified six major tech giants, including Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft, as gatekeepers subject to the regulations outlined in the Digital Markets Act (DMA). The DMA aims to enforce proactive rules to ensure fair competition in the digital market, tackling practices that give these gatekeepers an unfair advantage. The gatekeepers will need to comply with various obligations, including banning self-preferencing and promoting interoperability and fair access for business users. Non-compliance may result in significant fines and additional remedies imposed by the European Commission.
What is the Digital Markets Act (DMA)?
The DMA applies a proactive approach to competition concerns once a certain level of market power is reached. Gatekeepers that meet specific criteria, such as having over 45 million active local users, a turnover of €7.5 billion in the last three financial years, and a market capitalization exceeding €75 billion, will be subject to the regulations outlined in the DMA. The European Commission has the power to designate platforms that are predicted to gain an entrenched and durable position in the near future.
The regulations of the DMA include provisions to prevent gatekeepers from self-preferencing and requiring business users to exclusively use their services. It also bans gatekeeping app stores from blocking the installation of rival app stores and prohibits gatekeepers from preventing the promotion of competing services. Gatekeepers are required to share information generated by their platforms with business users and must adhere to data portability and service interoperability requirements.
In terms of advertising, gatekeepers are not allowed to track and profile users for targeted advertising without their consent. Users must also have the option to uninstall preloaded gatekeeper applications. Additionally, gatekeepers must apply fair, reasonable, and non-discriminatory (FRAND) terms for general access and fair dealing with business users.
Implications for the Tech Giants
The six designated gatekeepers will need to ensure compliance with the obligations outlined in the DMA within six months. Failure to comply may result in penalties of up to 10% of their global annual turnover, or even 20% for severe repeat offenses. The European Commission also has the authority to impose additional remedies, such as requiring a gatekeeper to sell parts of their business or banning them from acquiring additional services related to non-compliance.
While the DMA aims to create a more competitive environment and address unfair practices by gatekeepers, it remains to be seen how effective it will be in rebalancing the dominance of tech giants. The designated gatekeepers may face challenges and legal disputes to test the robustness of the regulations.