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European regulators are bracing for legal challenges to major rules designed to crack down on Big Tech, with member states increasingly concerned about how the new rules will be enforced.
EU politicians have hailed the adoption of the Digital Markets Act, which comes into effect next year and is expected to set global standards for how big online platforms such as Google, Amazon and Facebook can offer.
But after the law was approved earlier this year, a series of doubts were raised, according to EU officials and company executives who were investigating the law.
The risks include Big Tech groups seeking to undermine the provisions through litigation, member states seeking to focus on their own national affairs outside of the new law, and the European Commission not having enough staff to handle the massive task of enforcing the rules.
Among the new obligations included in the DMA are banning companies from ranking their own products ahead of competitors on online platforms and sharing information with smaller competitors.
Gerard de Graaf, head of the union’s new office in Silicon Valley next month, is among those expected to launch a legal fight against the measures.
“There will be a dispute [from tech companies]De Graaf told reporters recently. We are ready for judgment, but we want a constructive dialogue with the forum rather than an adversarial one.
But there are signs that Big Tech’s grievances with the DMA may spill over into the courts. Amazon said last month that the company was engaging “constructively” with Brussels but still had “concerns about the matter”. [DMA] “Unfairly targeting Amazon and a few other US companies.”
Amazon said in July that Germany’s Federal Cartel Office had decided to designate it as a powerful online platform, a denomination with additional legal burdens similar to DMA. The company will formally appeal, according to two people with direct knowledge of the matter.
“We focus on finding solutions,” said an executive at a major technology platform [over the DMA]. We are looking to make positive changes. Litigation is our last resort.”
In addition to legal action, the EU is facing opposition from the bloc. Many member states are seeking a greater role in following Big Tech by opening formal investigations and imposing heavy fines on companies.
That demand has led to tensions between the parent companies of Google and Facebook over how much power Brussels will have with national competition authorities to investigate the dominance of conglomerates such as Alphabet and Meta.
Under the DMA, the European Commission is empowered as the “sole authority” to enforce the regulation and decide when to open antitrust investigations and against which companies.
Even when member states decide to look at violations at the national level, these investigations must be submitted to Brussels. EU countries cannot launch their own investigations without the blessing of chief competition commissioner Margrethe Vestager.
Still, the extent to which national regulators should be involved in the fight against Big Tech is the source of the “difference of opinion” between the Commission and European capitals, according to senior EU officials and regulators.
A Brussels official said: “We are looking at cases when the member states are looking for major issues.” “The DMA leaves no loopholes for the member states to open their own rules and implementation opportunities. [so] It’s closing.”
This did not stop Germany from approving its own version of the DMA in 2021. Andreas Mundt, the head of the country’s competition regulator, pointed out the benefits of his country’s law coming into force.
“Once the DMA is in place, it is too early to say that we will not be able to monitor these. [cases against tech companies] No more,” he said. “I’m sure we’ll see a lot of action that isn’t covered by the DMA.”
The head of the Dutch competition authority, Martijn Snoop, said the agency is trying to set a European example of how to tackle illegal behavior by big tech after opening a lawsuit against Apple over the lack of alternative payment methods for users on its platform.
He said the move to centralize DMA enforcement in Brussels was “a political decision and nothing else,” but warned that his country had little incentive to work with the commission on tech issues.
“I’m not sure how many investigations we’re actually going to launch and I’m not sure it’s going to be an effective allocation of resources,” Snoop said. “It encourages national competition authorities to focus on non-DMA issues – or on companies that are not considered DMA gatekeepers but have a dominant position.”
To qualify as a “gatekeeper”, a company must have at least 45mn monthly active users or at least 10,000 annual business users. Google, Amazon, Facebook, Apple and Microsoft all meet this criteria, but so do other groups such as accommodation site Booking.com and ecommerce group Alibaba.
DMA is expected to bring many more cases which will increase the demand for competent enforcement authorities.
MEP Andreas Schwab, who chaired the DMA debate in the European Parliament, is among those concerned that Brussels’ ambitions are not matched by sufficient resources. While requesting a large budget to hire 150 more workers, the commission is hiring only 80.
In a recent letter to the Czech Republic, Schwab warned that implementing the rules should be “our common priority” during the EU presidency. Otherwise, he wrote, “their end will be seriously jeopardized”, which will cause “irreversible damage to the digital single market”.
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