The Digital market act has entered into force. How the EU anti big tech tightening works
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The European digital market act has entered into force. The package of rules wanted by Brussels to limit the dominant position on the market of the technological giants has been implemented since 1 November.
Linked to the Digital service act, the package of rules on the transparency of technological platforms with respect to content moderation, the Digital market act concerns big techs more closely. It aims to counter the anti-competitive and monopolistic regime in which they might find themselves operating. The goal is to help the birth of digital champions in Europe.
Not only. The law aims to encourage the growth of startups capable of innovating and perhaps competing with the technological giants of other continents. And give consumers the opportunity to choose different services, without necessarily bending the market in favor of companies that have reached such dimensions as to stifle any possible alternative.
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Who is the digital market act for?
To understand how it works, it is useful to explain the concept around which the whole standard revolves: “Gatekeeper”. This is how brokerage platforms are defined for the sale of products or services that have become monopolists of their own reference market over the years.
Gatekeeper means guardian. And the EU Commission defines these companies as the guardians of the access doors to the connection between retailers and consumers. Their position as intermediaries of this relationship could give them (or have already given) enormous power. To act as a “private regulator”, capable of creating “a bottleneck in the digital economy.” In other words, these companies could decide whether, and how, to pass through the door they are guarding the contact between the two parties, between producer-retailer and consumer, falsifying the relationship.
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How is a Gatekeeper determined?
The limits established by European law are quite rigid: 7.5 billion euros in the last three years of turnover in Europe; a market capitalization of at least 75 billion; 45 million end users monthly; 10 thousand business users in the EU.
Rather fixed parameters, which in fact identify the gatekeepers in the five most famous American technology companies in the world: Google, Apple, Meta, Microsoft and Apple.
What does the digital market act consist of?
The Digital market act is a decalogue for gatekeepers. A series of obligations to be respected to work in Europe. For example. If one of these companies tends to favor its services on its platform, or prevents the companies that use them from reaching consumers, it is a practice that is anti-competitive for the EU. And therefore they hinder the market on the one hand. Or they prevent the development of innovation. For example: the fines that the EU imposed on Google accusing it of favoring its shop over others on its search engine.
Again: when a gatekeeper implements unfair practices, such as imposing incorrect access conditions to their app store, or preventing the installation of applications from other sources than their own store, the company can force a private individual to pay a fee. more, or having to do without something.
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And here the closest reference could be the clash between the EU and Apple, with the Cupertino company accused of hindering other services such as Spotify to favor its Apple Music. Or, again to stay at Apple, the EU spotlights on the role played by Apple Pay. But the examples are many, all of the same tone. And they also concern Microsoft and Amazon. Everything suggests that EU interventions in this sector will increase in the coming years.
How is the digital market act applied?
The Commission in collaboration with the authorities of the EU Member States will apply the Digital market act, reads the EU note. The Commission will be able to impose penalties and fines of up to 10% of a company’s worldwide turnover and up to 20% in case of repeated violations.
In the event of systematic violations, the Commission may also impose “structural remedies necessary to ensure the effectiveness of the obligations imposed on these companies”, including “a ban on buying other companies”.
The package of rules gives the Commission the power to conduct market surveys “to ensure that the obligations set out in the regulation are up to date with the ever-changing reality of digital markets”.
The next steps
With its entry into force, the Digital Market Act will enter the implementation phase and will begin to apply in six months, starting May 2, 2023.
Subsequently, Brussels specifies in a note, within two months and at the latest by 3 July 2023, potential gatekeepers will have to notify the Commission of the services of their main platform if they meet the thresholds set by the Digital market act.
Once the complete notification is received, the Commission will have 45 working days to assess whether the company in question meets the thresholds and to designate it as the gatekeeper (for the latest possible submission, this will be by 6 September 2023).
After designation, gatekeepers will have an additional six months to comply with the requirements of the standard. And in any case they will not be able to do it after March 6, 2024.
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