Digital Markets Act

The Digital Markets Act (DMA) aims to create a level playing field in the digital market, targeting big companies known as gatekeepers who control essential digital services. To be considered a gatekeeper, a company needs to meet certain qualifications, such as a high market capitalization or annual turnover. The DMA sets out rules for gatekeepers, including allowing more user choices, promoting interoperability between different apps, and providing data transparency to businesses. Gatekeepers are forbidden from giving preferential treatment to their own services, stopping users from uninstalling pre-installed apps, and tracking users for targeted advertising without consent. The European Commission has the power to impose fines and other penalties for violations. The DMA is designed to be flexible, allowing for market investigations and potential designation of new gatekeepers as the digital landscape evolves. Monitoring and enforcement of the DMA involves gatekeepers informing the Co Welcome back to The Legal Place, where we break down complex legal issues into something a little easier to digest. Bite-sized learning, you could say. Exactly. And today we're serving up a pretty big plate, the Digital Markets Act, or DMA for short, have you heard of it? Oh, absolutely. It's been making waves, aiming to shake things up in the digital world, you know, making things fair for everyone. Okay. So imagine this, just a handful of companies controlling everything you see online, what you buy, maybe even what you think. It's a scary thought, isn't it? And that's precisely the issue the DMA is tackling. So it's like stepping in as a referee, making sure no one's playing dirty. Right, exactly. The DMA wants to ensure a level playing field, so to speak, in the digital market, especially for businesses and well, users like you and me. So how's it actually doing that? Where does it even begin? Well, it all starts with these massive companies, the ones they call bait keepers, think of them as the internet bouncers. They control who gets in and what they can do. Gatekeepers, huh? Intriguing. But what exactly makes a company a gatekeeper? What are the qualifications, so to speak? It boils down to control. Control over these really essential digital services, you know, like the big search engines, app stores, social media giants. These are the gateways to the online world. And these companies, they hold the keys. Okay. So we're talking about the Googles, the Apples, the Amazons of the world. You got it. But it's not just about being big though. There's a high bar to clear. A company needs a market capitalization of at least 75 billion euros or an annual turnover within the EU of at least 7.5 billion euros. Wow. So who made the cut? Who are these gatekeepers? Well, in September, 2023, the European commission officially named six. We're talking Alphabet, Amazon, Apple, ByteDance. Those are the folks behind TikTok, Meta, formerly Facebook and Microsoft. Okay. And Samsung, weren't they in the running too? They were investigated. Yeah. But ultimately they didn't quite meet all the criteria. So it's not just about the company itself, but also their specific services, right? Like one company might have multiple things that fall under the DMA. Absolutely. For example, Apple, they were designated a gatekeeper for their app store, the iOS operating system, and the Safari browser. But not for iMessage. Not for iMessage. Nope. That one was still under investigation. They were taking a closer look at that one. Fascinating. So once a company gets slapped with that gatekeeper label, what happens? Is it like digital detention? Not quite. Ha ha. But the DMA does lay down the law, you could say. It outlines a specific set of rules, do's and don'ts, if you will, that these gatekeepers have to follow. Ah, the rule book. So what are some of the do's? What are these gatekeepers obligated to do? Well, one big one is about giving users, you and me, more choices. Gatekeepers have to allow businesses to promote offers and even make sales outside of their platform. So you're saying if I'm, say, browsing for a new phone, I shouldn't be forced to buy it only through, like, the gatekeeper's platform? Exactly. You should have the option to go directly to the business's website, you know, to compare prices and all that. That makes a lot of sense. Yeah. What else is on the do list? Another important one is what they call interoperability. It's, uh, well, you know how frustrating it is when you can't easily switch between different messaging apps? Oh, tell me about it. Half my friends are on this app. The other half are on that one. It's a mess. Well, the DMA wants to smooth that out. Gatekeepers now have to allow third-party apps to, you know, work smoothly with their services. So in theory, you can message anyone regardless of what app they're using. Now that would be amazing, seamless communication across the board. Exactly. And then there's data transparency. Gatekeepers have to provide businesses access to the data they generate on those platforms. So companies can finally get a better understanding of their own customers. Exactly. So they can better tailor their services, their marketing, all of that. More transparency, fair competition. I'm liking this DMA already. But now let's get to the don'ts. What are these gatekeepers absolutely forbidden from doing? Well, first off, no more playing favorites. They can't give preferential treatment to their own services, especially in search results or rankings. So Google can't just bury its competitors at the bottom of the search page. Exactly. No more sneaky tactics like that. And another big one, user control. Remember those pre-installed apps you could never get rid of? Yes. So annoying. Well, under the DMA, gatekeepers can't stop you from uninstalling them. You have control over your device again. It's about time. What else is on the don't list? Ah, this is the big one. Targeted advertising. You know, those ads that follow you around the internet. Like you look at a pair of shoes once and suddenly they're everywhere. It's creepy, right? Like how do they even know? Well, the DMA is cracking down on that. Gatekeepers can't track users outside their core platform for targeted advertising without your explicit consent. So no more shadowy ad tracking without permission. I can get behind that. But what happens if these gatekeepers try to bend the rules? Are there actual consequences? Oh yeah. The DMA isn't messing around. The European commission has the power to impose some hefty fines, up to 10% of a company's global annual turnover for violations. Okay. Now we're talking. And it's not just fines. They can also impose something called periodic penalty payments, which can really add up and even force a company to sell off parts of its business if necessary. So the commission has some serious tools to make sure these gatekeepers fall in line. Oh, absolutely. They're not afraid to use them either, but we'll dive into all of that and more in part two of our deep dive. Sounds good. We'll be back after a short break to uncover even more about the DMA. Stay tuned. You know, one thing that really struck me about the DMA is how they, uh, how they plan for the future with it. What do you mean? Well, they knew that the digital world, it's constantly changing, right? So they actually built in like some flexibility into the DMA. So it's not just set in stone, hoping for the best. Exactly. They gave the commission the power to open up market investigations, you know, not just for those arguments against designations, like we talked about with iMessage, but also to potentially designate new gatekeepers. So as new players emerge, they can be added to the list. Exactly. Or even update those obligations. You know, those do's and don'ts if the, uh, if the whole market shifts in a big way. So it's a living document kind of adapting to the internet. Precisely. But let's, uh, let's shift gears a bit here. Let's talk about another really important part of the DMA and that's monitoring and enforcement. Yeah. Cause rules are only as good as, you know, how well they're enforced, right? Absolutely. So how do we make sure these gatekeepers are actually playing by the rules? Well, those companies designated back in September, 2023, they were given six months to comply with those main obligations. So March 7th, 2024 was D-Day. Exactly. Now this first annual report, it doesn't actually cover the monitoring of those core obligations just yet, but it does shed some light on some other key aspects of enforcement. Well, they focus on two main areas. First there's article 14 of the DMA. That one requires gatekeepers to inform the commission of any planned mergers or acquisitions. Like if they're buying up another company or merging with them. Yeah. And, uh, especially where those companies, you know, they either already provide core platform services or they operate in that digital sector or they're involved in data collections. So basically the commission wants to keep a close eye on how these gatekeepers are growing and potentially consolidating power, right? Exactly. And in 2023 alone, the commission, they received three notifications of intended concentrations, what we call concentrations from these gatekeepers and they're watching them closely. Transparency is so important, especially when you're dealing with companies that already have so much influence, you know? Absolutely. The second area they highlight is article 28. This one's all about compliance. Compliance. That sounds pretty serious. What does that entail exactly? Well, it requires gatekeepers to actually establish a whole dedicated compliance function within their organization. So it's not enough to just passively follow the rules. They have to actively show that they're taking compliance seriously. Right. Article 28 even specifies that this function needs to be independent from, you know, the gatekeepers operational functions. They need a separate team with real authority and resources just to monitor compliance and provide guidance. So it's like having an internal watchdog to make sure everyone's playing by the rules. Exactly. And commission, they've been actively monitoring this too. They've been working with those designated gatekeepers to make sure these compliance functions are up to par. How's that going? Are they cooperating? So far, it seems like it. The report says that all those gatekeepers, they've appointed compliance officers following those principles laid out in article 28, and they've shared those details with the commission. Okay. So they're at least taking those first steps. Yeah. And remember the commission, they have all those enforcement tools, like those big signs we talked about. If these gatekeepers don't keep their promises. Right. The DMA has Heath. But it's not just about the commission. Right. What about individual countries? The DMA is an EU law, but each country has its own systems in place too. That's a great point. The DMA recognizes that cooperation and coordination between the commission and those national authorities. It's absolutely essential. It makes sense because ultimately they're all working towards the same goal. Right. A fairer digital market for everyone. Exactly. And articles 37 and 38 of the DMA, they actually lay out the whole framework for this cooperation. It's all about a coordinated approach, you know, making sure that enforcement is consistent and effective across all those EU member states. So it's not like a patchwork of different interpretations and enforcement practices, right? Exactly. And a lot of this cooperation, it actually happens through those existing networks, like the European competition network or ECN for short. That's the network of national competition authorities, right? That's the one. The commission keeps those ECN members informed about their designation decisions, any ongoing market investigations related to the DMA. And in turn, those national authorities can share information with the commission about their own investigations into potential DMA violations. So it's a two way street, everyone sharing information, working together. Exactly. Now the first annual report, it does point out that as of the end of 2023, no national competition authority had actually launched a formal investigation into a designated gatekeeper under their own national competition law. But that doesn't necessarily mean that everything's running perfectly smoothly, does it? No, not necessarily. Remember those core obligations of the DMA, they only became applicable in March, 2024. It's still pretty early. Right. Those early stages of implementation and enforcement. So it's more about setting the stage for cooperation and information sharing right now. Exactly. But the DMA also anticipates that there might be, you know, instances where national competition laws and the DMA, they kind of overlap. Ah, so what happens then? Well, they have a mechanism for that. If a national authority is planning on launching an investigation that might touch on those DMA obligations, they have to inform the commission. So again, it's about avoiding duplication of effort and making sure that the rules are applied consistently. Precisely. The commission can then decide whether they want to take over the investigation or let the national authority go ahead, depending on the specifics of the case. So checks and balances to maintain that coordinated approach. Exactly. Now, in addition to that ECN, the DMA also establishes a high-level group specifically dedicated to the DMA's implementation. Okay. A high-level group. Tell me more about that. Who are they? What do they do? Well, this group was actually created in March, 2023, and it's made up of representatives from all sorts of different EU bodies and networks that are involved in regulating the digital sector. So it's like bringing all the key players together. Precisely. You've got representatives from the European regulators for electronic communications, the European data protection supervisor and board, the European competition network, the consumer protection cooperation network, even the European regulatory group of audiovisual media regulators. Wow. That's a mouthful. So what do they actually do? What's their role? Their main purpose is to, you know, support a coherent and effective implementation of the digital sector. They meet regularly to discuss challenges, share best practices, you know, and provide guidance on how to interpret those DMA provisions. So it's a forum for collaboration and sharing expertise among all these different regulatory bodies. Exactly. They also play a role in identifying and evaluating any potential conflicts or overlaps between the DMA and other like sector-specific regulations that might also apply to those gatekeepers. That's important, especially when you're talking about the That's important, especially in a field as complex as the digital sector, where you have all these different regulations interacting. Absolutely. The DMA is just one piece of the puzzle and this group helps ensure it fits in nicely with everything else. And the commission can also tap into their expertise during those market investigations we talked about. Oh yeah, absolutely. They can consult with the group on specific cases, you know, get their insights and experience to make sure they're taking a thorough approach to market analysis and any potential remedies they might need to implement. So a valuable resource for the commission offering a range of perspectives. Exactly. The first annual report, it highlights that the group actually had its first meeting back in May, 2023 with representatives from all those different bodies and networks we mentioned. What was on the agenda for that first meeting? Mainly introductions, sharing updates on what's happening in their respective areas and discussing the overall implementation of the DMA. They also agreed on some rules of procedure to guide their work going forward. Laying the groundwork for effective collaboration. Exactly. Now it's important to remember that this high level group, it's purely advisory. They don't have any actual decision-making power when it comes to DMA enforcement. Right. But they provide that valuable input to inform the commission's decisions. Precisely. They're a key part of that collaborative ecosystem that the DMA has established to ensure it's actually implemented effectively. Well, this has been quite the deep dive. We've covered so much ground from those core principles of the DMA to all the intricate details of how it's implemented and enforced. It's definitely complex, but it's doing important work, you know, shaping a fair digital world. Absolutely. And it's clear that the commission, they're serious about their role as enforcer, working closely with those national authorities and really leveraging the expertise of these various regulatory bodies to make sure the DMA achieves its goals. Indeed. It's a dynamic process, still in its early stages, but the DMA is already having a noticeable impact on how these digital gatekeepers are operating within the EU. And potential beyond, right? Other countries are watching closely. Absolutely. Other jurisdictions are looking to the EU's approach as they figure out how to regulate their own digital markets. So the DMA could actually become a global model for a fairer internet. It's definitely a possibility. We'll have to see how it all plays out, but the DMA is setting an important precedent. Well, it's been fantastic to take this deep dive into the DMA with you. It's a lot to wrap your head around, but understanding the basics is so important for anyone who uses the internet. I couldn't agree more. It's about empowering yourself, you know, making informed choices in the digital world. Exactly. Now, before we wrap up, let's turn our attention to something that's probably on everyone's mind. The potential impact of the DMA, not just on those big gatekeepers, but on everyday users like you and me. We'll explore that in part three of our deep dive. Okay, so we're back and it's time to really get down to the nitty gritty. How does the DMA actually affect, well, me, you, the everyday internet user? Yeah, that's the big question, right? The one everyone wants answered. And I think it's safe to say the DMA has the potential to really change your online experience for the better, hopefully. Okay. Give me the good news. What can users actually expect to see from this DMA? What's going to change? Well, one of the biggest things is more choice, more control over the services and apps you use. You won't be so, so stuck. So no more feeling trapped in like one ecosystem because all your friends are there or because it's, you know, what you're used to. Exactly. The DMA is all about breaking down those walls. Remember interoperability. That could mean a much smoother, a more connected experience. I'm just imagining being able to easily switch between messaging apps or having the option to choose which app store I want to use. It's refreshing. That's the idea. The DMA also wants to give you back control over your data, how it's used, all of that. So no more creepy ads following me around because I looked at a pair of shoes once. Well, let's say the DMA's rules on data collection and targeted advertising, they should definitely give you more control over your privacy. It's about time. A less intrusive internet. That's what we all want. Right. And here's another thing that might surprise you. The DMA could actually lead to more innovation. Wait, really? How does regulating these big companies lead to more innovation? Well, if those gatekeepers can't, you know, unfairly favor their own services or block out the competition, it gives smaller companies, startups, a real chance to grow. Ah, so it levels the playing field. More competition leads to more innovation. Exactly. More diversity, a more dynamic digital ecosystem. And that means ultimately better services for everyone and potentially lower prices too. That's definitely a possibility. More competition often drives prices down. Plus, you know, the DMA prohibits those unfair pricing tactics, things like predatory pricing. So things should be more transparent for consumers. This is all sounding pretty good, but realistically it's still early days, right? I mean, we're not going to see the full effects of the DMA for a while. True. We're still in that implementation phase. It takes time for these things to, you know, to really take root. But at least the DMA has those built-in mechanisms to adapt, right? As the internet changes and evolves. Exactly. They can update the rules, designate new gatekeepers, launch investigations into new issues. It's not static. It's designed to evolve. That's good to know. And we've also seen how the DMA is already having an impact, you know, beyond just Europe, right? Absolutely. Other countries are watching, definitely taking notes. They're looking at how the EU is handling this whole thing as they try to regulate their own digital markets. So the DMA could become a global model for a fairer internet for everyone. It's possible. Time will tell, but it's definitely a precedent and that's a big deal. Well, it's been really enlightening to dive into the DMA with you. It's a lot to take in, but I think we've covered the key points. Definitely. And I think that's what's important, you know, understanding the basics, how it all works. Exactly. Knowledge is power. Right. Especially when it comes to navigating the online world. Couldn't have said it better myself. Well, that is all for today. We hope to see you soon at the legal place. And in the meantime, as we always say, keep learning.