Companies such as Apple, Google and Amazon could soon face fines of up to 20% of their worldwide turnover or even behavioral or structural remedies, when they violate rules laid out in the European Union’s Digital Markets Act.
The Digital Markets Act defines rules for large online platforms, called gatekeepers. In particular, its rulesets defines what gatekeepers have to do and what they can’t do any longer.
An organization is considered a gatekeeper if it has over 45 million active end users each month or 10,000 yearly active business users. Gatekeepers furthermore have an annual European Union turnover of over 7.5 billion Euro or more in the last three financial years, or an average market capitalisation to at least 75 billion Euro in the last financial year. They also need to provide the same core platform service in at least three Member states.
Core platform services mean any of the following according to the DMA: online intermediation services, online search engines, online social networking services, video-sharing platform services, number-independent interpersonal communication services, operating systems, web browsers, virtual assistants, cloud computing services, and online advertising services.
The list of prohibited activities addresses common anti-consumer and anti-competition practices of gatekeepers.
In particular, gatekeepers may no longer do the following:
- Pre-install “certain apps or software”, or prevent users from “easily un-installing” these products.
- Require that software such as web browsers is installed “by default when installing an operating system” (use certain bundling practices).
- Block developers and companies from using third-party payment platforms for application sales.
- Give their services and products an unfair advantage by ranking them higher than products of other companies.
- Use private data collected by one service “for the purpose of another service”.
- Impose unfair conditions on business users.
Companies like Apple, Microsoft, Google or Amazon are affected directly by the DMA. Apple, for instance, blocks third-party payment platforms, prohibits the use of other browser engines than its own, and installation of other application stores.
Google’s practice of pushing Android manufacturers to include certain company apps on Android could come to an end, and Google Search can no longer push YouTube and other Google Products over others.
Microsoft’s practice of integrating Bing Search heavily in Windows and preventing the uninstallation of certain apps on Windows would also violate the rules.
Other gatekeepers are affected to varying degrees as well.
The Digital Markets Act defines new rules that gatekeepers need to follow next to this.
- Unsubscribing from core platform services needs to be as easy as subscribing.
- Basic functionality of instant messaging services need to be interoperable.
- Provide business users with “marketing and advertising performance data on the platform”.
- Inform the European Commission about acquisitions and mergers.
Gatekeepers that do not comply risk first offender fines of up to 10% of their worldwide turnover. Repeat offender fines go up to 20% of the gatekeeper’s worldwide turnover. Gatekeepers that fail to comply at least three times in eight years may face an open market investigation, which could lead to the imposing of behavioral or structural remedies.
The DMA is expected to be adopted by the European Council in September 2022. Once signed by the President of the European Parliament and the President of the Council, the DMA will start to apply six months later. The full DMA document is available here (PDF file).
The document lacks information on how certain changes can be achieved by gatekeepers. The interoperability requirement for instant messaging services alone raises questions on how this can be achieved in a short period.
Now You: what is your take on the DMA?
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