Everything you need to know about Digital Markets Act?

Export Import News

09-Dec-2022

Seven months after the European Parliament approved it in March of this year, the Digital Markets Act was put into effect in the European Union recently. It adds punitive clauses and monetary limits to prevent particular tech corporations from having an unfair monopoly. The legislation, which was first put forth by the European Commission in December 2020, aims to stop unfair business practices by tech firms that serve as "gatekeepers" in the online sphere. In simpler terms, it aims to challenge Big Tech's dominance, which impedes the development of new and alternative platforms. This blog explains to you all about Europe's digital markets act.

What is the European Digital Markets Act?

The Digital Markets Act (DMA), also known as Regulation 2022/1925 on contestable and fair markets in the digital domain, was adopted on September 14, 2022. On December 15, 2020, the European Commission submitted the DMA (for more information, see our website, here, and here). Since then, the DMA has undergone numerous revisions as a result of reviews by the Council and European Parliament.

The Digital Markets Act was created as a regulatory response to the perception that competition law (and in particular, the prohibition on abusing a dominant position as defined by Article 102 TFEU) was unable to address certain types of behaviour by large, digital companies, such as Google, Amazon, Facebook, Apple, and Microsoft.

Who are the Gatekeepers?

The Digital Markets Act (DMA) specifies a list of specific objective standards that must be met in order for a sizable online platform to be considered a "gatekeeper." This enables the DMA to continue to be effectively focused on the issue with big, systemic internet platforms that it seeks to address.
These requirements will be satisfied if a business

  • A solid financial standing, a considerable impact on the internal market, and is engaged across several EU countries.
  • A solid position as an intermediary, connecting a sizable user base to a sizable number of enterprises.
  • If the company completed the two aforementioned requirements in each of the last three fiscal years, it has (or is about to have) an established and long-lasting position in the market, indicating that it is stable over time.

Which companies are considered Gatekeepers?

If a company satisfies the qualifications given below, it qualifies as a gatekeeper if it runs one or more of the "key platform services" listed in the DMA. Principal platform services are:

  1. online intermediation services
  2. online search engines
  3. online social networking services
  4. video-sharing platform services
  5. number-independent interpersonal communication services
  6. operating systems
  7. cloud computing services
  8. advertising services
  9. web browsers
  10. virtual assistants

Companies that meet the aforementioned requirements are thought to be gatekeepers, although they can submit documented justifications to the Commission for exemption. On the other hand, businesses that don't fit the requirements may also be labelled as gatekeepers based on a qualitative evaluation done by the Commission.

Benefits of the Digital Markets Act

There are several benefits of the Digital Markets Act. Some of them are -

  1. It will be more equitable for business users who rely on gatekeepers to provide their services in a single market.
  2. Technology start-ups and innovators will have fresh chances to compete and innovate in the online platform environment without being constrained by unjust terms and restrictions.
  3. Direct access to services, more options to transfer providers if they so desire, a greater selection of superior services, and more affordable prices will all be available to consumers.
  4. Gatekeepers will keep all chances for innovation and the provision of new services. Simply put, they won't be permitted to use unethical tactics against the clients and users of their services who depend on them to obtain an unfair advantage.

 

How Do Digital Markets Act Impact these Gatekeepers?

Once a provider has been designated as a gatekeeper, the DMA subjects it to a variety of prohibitions and obligations, some of which are not applicable to all core platform services and are frequently based on the decisional practice or investigations in the application of the prohibition to abuse a dominant position of competition authorities. These include, among other things, restrictions on interoperability, most-favourable nation clauses, tying, using rivals' data, or self-preferencing, as well as duties to provide information on user data, performance statistics, and access under FRAND circumstances.
Some restrictions and requirements may be adjusted further for specific gatekeepers as necessary. Additionally, following a market investigation, the European Commission has the authority to modify the mentioned prohibitions and requirements by delegated actions (i.e. without the Council and Parliament's approval) within defined parameters.
Finally, the DMA has been long anticipated, and when it begins to apply to the targeted undertakings, it is to be expected that the European Commission and some state competition authorities will not hesitate to start employing this new tool (for the most part, as of 2 May 2023). 

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