The powers of technology giants like Facebook owner meta, Google, Amazon and Apple could be severely curbed as the European Union Council and European Parliament have reached a provisional political agreement on the landmark Digital Markets Act (DMA).
The DMA, the process for which began some 16 months ago, defines clear rules governing large online platforms and aims to ensure that no large online platform that acts as a gatekeeper for a large number of users abuses its position to the detriment of other companies wishing to access such users.
For a platform to qualify as a gatekeeper, it must either have had annual revenue of at least €7.5 billion ($8.2 billion) within the European Union (EU) in the past three years or have a market valuation of at least €75 billion ($82 billion), and it must have at least 45 million monthly users and at least 10,000 business users established in the EU.
Big Tech firms deemed “gatekeepers” can no longer rank their own products or services higher than those of others; reuse private data collected during a service for the purposes of another service; establish unfair conditions for business users; pre-install certain software applications; or require app developers to use certain services like payment systems or identity providers in order to be listed in app stores.
If a gatekeeper violates the rules laid down in the legislation, it risks a fine of up to 10% of its total worldwide revenue. For a repeat offense, a fine of up to 20% of worldwide turnover may be imposed. Under the new rules, if a gatekeeper violates the rules at least three times in eight years, the European Commission can open a market investigation and impose behavioral or structural remedies. To make sure that gatekeepers do not undermine the rules set out in the DMA, the regulation also enforces anti-circumvention provisions.
The wording of the DMA is being finalized and is subject to approval by the Council and the European Parliament. This is expected to be a formality — and the DMA is likely to become law by October of this year. The European Commission will be the sole enforcer of the regulation.
Economic concerns deriving from a gatekeeper’s data collection will be addressed in the DMA and wider societal concerns will be tackled in the separate Digital Services Act, a decision on which is expected shortly.
Addressing the Commission on Friday, commissioner for competition and executive VP Margrethe Vestager, said: “Over these years as commissioner for competition, complaints have been coming through our doors. We had not one, not two, but three Google cases. We are now on the fourth. We had two Amazon cases before; we now have two open Amazon cases again. We have three Apple cases; we have a Facebook case. We have seen what can happen in a marketplace and we see the changes in the specifics in every case.”
She continued, “The thing is that what we have learnt over these years is that we can correct in specific cases, we can punish illegal behavior, but when things become systematic, then we need regulation as well. If there is a systemic misbehavior, then we need regulation to come in.”
“Without enforcement, there is no real change on the ground,” Vestager added.
Meanwhile, a broad coalition from the European media sector, including public and commercial broadcasters, radio and the press, has welcomed the agreement. Grégoire Polad, on behalf of the coalition, said: “Targeting the regulation to genuine gatekeepers is the right approach. This is good for business and innovation, but also good for democracy as harmful practices by the gatekeepers will no longer be tolerated, ensuring Europe’s rich and diverse media can flourish on a more equal footing.”
“We expect big tech to start complying with the new rules as soon as possible and we encourage the European Commission to proceed on the enforcement phase of the regulation,” Polad added.
