EU reins in tech giants with new anti-monopoly powers

The Digital Markets Act would likely bar Amazon from using data from its third-party sellers to inform its own product development, and require Android to offer users alternatives to Google search and email.

The European Union has agreed to push ahead with major new digital rules to rein in "gatekeepers", such as Amazon, Apple, Google, Microsoft and Meta.

The EU Parliament, Council, and Commission agreed to the Digital Markets Act (DMA) late last week, with EU lawyers now checking the legal text to finalise how the laws will operate.

Once completed, the details of the Digital Markets Act will be made publicly available and sent through to the EU Parliament and Council for approval. 

After this approval, the Act will go into effect 20 days after its publication and will enter into force at the beginning of 2023.

The EU-wide Act will apply in addition to competition law rules and targets only the largest digital platforms. 

“More competition, more innovation and more choice for users”

After the negotiations, the rapporteur from Parliament’s Internal Market and Consumer Protection Committee, Andreas Schwab (EPP, DE), said: "The agreement ushers in a new era of tech regulation worldwide. The Digital Markets Act puts an end to the ever-increasing dominance of big tech companies. 

“From now on, they must show that they also allow for fair competition on the internet. The new rules will help enforce that basic principle. Europe is thus ensuring more competition, more innovation and more choice for users.”

How it works

The DMA will impose a broad set of upfront, legally binding conduct obligations (dos and don’ts) on companies operating in the EU whose products are determined to be an important gateway for businesses to reach consumers (gatekeepers). 

Key parts of the DMA include:

  • Adding web browsers and voice assistants to the definition of “core platform services” but connected TVs are excluded from the DMA’s scope.

  • Raising thresholds to identify a company as a “gatekeeper” to €7.5bn in annual revenue and market capitalisation of €75bn. An organisation also needs to have at least 45 million monthly end users and 10,000 yearly business users.

  • Restricting gatekeepers from combining data across platform services, unless consent has been obtained in an explicit and clear manner in line with the EU General Data Protection Regulations (GDPR). Combining data across platforms will not be able to take place through alternative legal bases for processing, such as protecting the vital interest of an individual or for the public interest.

  • Restricting gatekeepers from requiring business users of their core platform services to make use of their payment service platforms, in addition to the European Commission’s original obligation to prohibit gatekeepers to restrict business users to use gatekeepers’ identification services.

  • Providing advertisers and publishers access to price-setting conditions and algorithms used by gatekeepers.

  • Removing the European Parliament’s proposal to ban targeted advertising towards minors as content moderation issues should be tackled by the Digital Services Act.

  • Messaging platforms will have to provide interoperability with competitors for one-to-one conversations between users, but not for group chats at least for another four years.

  • Increasing the maximum level of fines for non-compliance from 10% to 20% of the gatekeeper’s worldwide revenue in cases of repeated infringements.

Beyond the gatekeepers: what all companies need to now

However, it is not only gatekeepers who need to take note. All companies operating in the digital space need to be fully attuned to the implications of the DMA as it will likely impact their commercial activities directly or indirectly. 

Farhad Divecha, MD and Founder of AccuraCast, said: "This could open up exciting new opportunities for agencies like us. The last time the EU forced a tech giant (Google) to allow competitors to play on an equal footing, Google created the CSS (Comparison Shopping Service) programme, which led to CSS providers reducing CPCs by 20% so they could compete with Google's own Shopping results.

"This new law could force historically the high walled garden of Apple & the iOS ecosystem to open up. It could also create new opportunities for advertising and monetising messaging app platforms."

“Avoids any form of overregulation for small businesses”

“As the European Parliament, we have made sure that the DMA will deliver tangible results immediately: consumers will get the choice to use the core services of big tech companies such as browsers, search engines or messaging, and all that without losing control over their data,” Schwab added. 

“Above all, the law avoids any form of overregulation for small businesses. App developers will get completely new opportunities, small businesses will get more access to business-relevant data and the online advertising market will become fairer."