New laws are being implemented in Europe to curb Big Tech’s market power

Image Credits: Sébastien Bertrand / Flickr under CC BY 2.0 license.

Gaffam giants will mark their calendars today for the EU’s Digital Markets Act (DMA), which plans to curb Big Tech’s market power after it took effect last November.

The next big milestone is just a few months away when, in early fall, the Commission will determine which of the usual suspects will be subject to the union’s shiny new antitrust rules. But tech giants are facing a busy summer to develop their regional compliance strategies.

Quick summary: The DMA imposes a specific set of obligations on Internet “gatekeepers” who meet specific, cumulative requirements: they must first operate at least one “core platform service” (these include online search engines, social networking services, app stores, certain messaging services , virtual assistants, web browsers, operating systems and online intermediary services).

Secondly, they must be large-scale and entrenched market places to fall under the regime. This means reporting annual revenue in the European Economic Area that has reached over €7.5 billion in the last three financial years. Otherwise, it has an average market capitalization of at least €75BN in the last financial year “or an equivalent fair market value”, and provides basic platform services in at least three EU Member States.

Gatekeepers must also be, as the Commission puts it, “a useful gateway for business users and end consumers” – this is the case if the company in question operates a major platform service with 45M+ monthly active users in the EU. More than 10,000 active EU business users per year in the last financial year.

Finally, an established and sustainable position is assessed if the company has met other criteria over the past three financial years. Although the Commission may apply a subsection of the DMA rules to companies it suspects will be gatekeepers in the near future.

It’s clear that some big names will hit the DMA threshold (Apple, Amazon, Google, Meta, and Microsoft seem entirely safe bets to be considered gatekeepers). But we’ll have to wait a few months to see if the full list holds any surprises.

And on that front, European music streaming giant Spotify obviously doesn’t expect to be one of them… but, hey, let’s see!

“Now that the DMA is in effect, gatekeepers who meet the established size limits will have until July 3 to notify the Commission of their core platform services. The commission will then have 45 working days (until September 6, 2023) to determine whether the company meets the requirements and assign gatekeepers. After being designated, gatekeepers have six months to comply with the requirements set out in the DMA (ie until March 6, 2024),” the commission wrote in a press release.

If you’re feeling deja vu, that’s probably because EU lawmakers recently designated 19 Very Large Online Platforms (VLOPs) for the DMA’s sister regulation, the Digital Services Act (DSA), which resets the EU’s ecommerce governance regime. .

Perhaps some of the same companies designated as VLOPs under the DSA will be appointed gatekeepers under the DMA – meaning they will accumulate additional “certain obligations” beyond the algorithmic transparency requirements required by the DSA.

The DMA’s operational “doings and don’ts” aim to ensure that digital markets are “open and competitive” by enforcing fixed behavioral conditions on gatekeepers designed to curb known anti-competitive practices.

Examples of DMA obligations include restrictions on how gatekeeping platforms can use third-party data and requirements for third parties on the usage their applications generate. Restrictions on self-selecting and non-overriding default applications or settings that cannot be changed by consumers; Communication requirements, including messaging services; App stores have requirements that don’t prohibit sideloading or require developers to use their own services (e.g. payment systems). and a ban on tracking users for targeted ads without consent, among other conditions.

Much of the list refers to the Commission’s experience in past Big Tech antitrust cases, such as the numerous EU enforcement actions against Google. But there were some later additions by co-legislators in Parliament and the Council, such as messaging restrictions (which surprised many) and limits on tracking ads.

Some of the same conditions apply in certain EU markets using pre-existing competitive forces. Like the Netherlands – which last year forced Apple to allow developers of dating apps to use alternative payment systems.

Germany remains ahead of the ante-curve domestically after updating its own competition system in early 2021 – and has some enforcement against a number of tech giants that are already positioned to compete domestically.

Implementation of EU data protection law is finally reducing the ability to force meta ads on users. So we got a taste of the big things to come as DMA was fully firing on all cylinders.

The big change here is that the conditions apply face-to-face – so the idea is to proactively regulate digital giants who have the power to set rules on others who need access to their core platform services and force them to be pro-competitive and sensitive. consumer needs (rather than for their own use); Unlike antitrust regulators, they spend many years investigating and collecting infringements before bringing charges against bad behavior, especially long after the damage has taken root, as in most of Europe with classical (ex-post) competition rules.

That said, pan-EU regulation will take some time to roll out. And there are ongoing concerns about resourcing and how prepared the commission is to have the courage to step into the sticky position and take on such a tough regulatory task, relying on some of the most powerful platforms in the world.

Time will tell how much pushback the DMA will get from tech giants as lawmakers suggest disruptive changes to their money-making machinery. It also remains to be seen how willing the Commission is to stick to its guns and forcefully enforce the new digital world order (especially with the upcoming EU elections reshaping the Union’s political power structure and bringing in new leaders who are not committed to this approach).

We certainly won’t see any DMA enforcement until next spring – as the gatekeepers appointed in September will have six months to get their house in order. But we will see some operational changes in preparation for the new regulations. And perhaps with entirely new business models emerging down the line, for example, involuntary ad tracking for the major social media giants is becoming less and less common. More legal action to test the boundaries and limitations of the DMA also seems inevitable. So the next few years in Europe are going to be filled with exciting new power struggles.

In the UK, which left the EU following the Brexit referendum, the government recently announced it will move forward with a re-introduction of its own precedent to crack down on anti-competitive tech giants.