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- The Digital Markets Act (DMA) is a European Union law designed to limit the market power of large online platforms, designated as "gatekeepers," adn promote fairer competition in...
- the DMA focuses on ten core platform services, including intermediary services (online marketplaces, app stores), social networks, search engines, cloud services, and operating systems.
- For example, on March 7, 2024, the European Commission formally designated six gatekeepers: Alphabet (Google), Apple, Meta (Facebook, Instagram, WhatsApp), Amazon, Microsoft, and ByteDance (TikTok).
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What is the Digital Markets Act (DMA)?
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The Digital Markets Act (DMA) is a European Union law designed to limit the market power of large online platforms, designated as “gatekeepers,” adn promote fairer competition in digital markets. It came into full force on May 2, 2023, wiht most provisions becoming applicable on March 7, 2024. The DMA aims to prevent these gatekeepers from abusing their dominant positions and to provide more opportunities for smaller businesses and innovative startups.
the DMA focuses on ten core platform services, including intermediary services (online marketplaces, app stores), social networks, search engines, cloud services, and operating systems. Gatekeepers are companies that control access to these core platform services and have meaningful impact on the internal market. The European Commission identifies gatekeepers based on criteria related to size, market capitalization, number of users, and control over essential digital services.Non-compliance can result in fines of up to 10% of a company’s total worldwide turnover, perhaps rising to 20% for repeated infringements.
For example, on March 7, 2024, the European Commission formally designated six gatekeepers: Alphabet (Google), Apple, Meta (Facebook, Instagram, WhatsApp), Amazon, Microsoft, and ByteDance (TikTok). European Commission press release. These companies are now subject to the DMA’s obligations.
Key Obligations for Gatekeepers
The DMA imposes a series of “dos and don’ts” on designated gatekeepers. These obligations are designed to ensure fairer practices and greater choice for consumers and businesses.
- Interoperability: Gatekeepers must allow their services to interoperate with those of competitors. For instance, messaging apps must allow users to exchange messages with users of other messaging services. Digital Markets Act – European Commission
- Data Portability: Users must be able to easily port their data between different platforms.
- Fair Access: Gatekeepers must provide fair access to their platforms for businesses, including access to data generated by those businesses.
- No Self-Preferencing: Gatekeepers cannot favor their own services over those of competitors.
- No Bundling: Gatekeepers cannot require users to subscribe to additional services as a condition of using their core platform services.
The European Commission has the power to investigate potential breaches of the DMA and impose significant fines. On March 7, 2024, the Commission opened investigations into Apple, Google, and Meta regarding potential non-compliance with the DMA. European Commission press release
Impact on Specific Companies
The DMA has a significant impact on the business practices of the designated gatekeepers, requiring them to make ample changes to how they operate.
Apple
apple faces scrutiny over its App Store rules, particularly regarding restrictions on developers and the requirement to use Apple’s in-app purchase system. The DMA requires apple to allow developers to offer alternative payment systems and to allow users to sideload apps. Reuters report on Apple’s DMA changes
Google is under pressure to provide fairer treatment to competing search engines and to allow users to easily uninstall pre-installed apps on Android devices. The DMA also restricts Google from using data collected from its various services to favor its own products. The Verge report on Google’s DMA compliance
Meta
meta is facing challenges regarding its data practices and its ability to combine personal data across its different platforms (Facebook, Instagram, WhatsApp). The DMA requires Meta to obtain explicit consent from users before combining their data.Politico report on Meta’s DMA compliance
Enforcement and Penalties
The European Commission is responsible for enforcing the DMA. It has the power to conduct market investigations, issue fines, and impose behavioral remedies. The DMA introduces a two-tiered penalty system: for non-compliance with obligations specified in Article 6(1) (the core obligations),a fine of up to 10% of the gatekeeper’s total worldwide turnover in the preceding financial year can be imposed