On November 1, a new regulation – the European Union’s Digital Markets Act (DMA) – came into force.
The DMA is part of the European regulatory program known as ‘A Europe Fit For the Digital Age’ – designed to regulate the digital space and includes other legislative proposals like the Artificial Intelligence Act and the Data Governance Act.
With more than 15 different Regulations and Directives on the way, the program will have a significant impact on the digital regulatory landscape in EU countries in the coming years.
Setting standards for how the digital economy of the future will function, the DMA Europe regulation is designed to put an end to unfair practices by companies that act as ‘Gatekeepers’ in the online platform economy.
How the DMA impacts Gatekeepers and other businesses
Designed to protect consumers and give rivals a better chance to survive against the world’s powerful tech juggernauts, it will compel large online platforms to overhaul their business models to increase competition in the digital market.
While for Gatekeepers, the new regulation will mean adhering to various requirements that mean systemic, technical, and procedural changes (below), for businesses operating on gatekeeper platforms, the new rules will provide an improved position.
“They will enjoy a higher level of equality and transparency and, in time, a fairer and contestable market,” according to Deloitte.
It will also improve the position of consumers using gatekeeper platforms, who will have more freedom of choice, see improved protection of their data and enjoy the benefits of interoperability and data portability.
“The agreement ushers in a new era of tech regulation worldwide,” said German MEP Andreas Schwab, who led the negotiations for the European Parliament.
“The DMA 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.”
Digital Markets Act – what are the requirements and who does it apply to
While it is expected to be impactful and far-reaching, according to Deloitte, it will only impose obligations on a small number of very large online platforms that act as ‘Gatekeepers’ – namely the world’s most iconic web giants, which will now be subject to special rules.
These Gatekeepers are core online platforms that offer gateway services between consumers and businesses that have become almost indispensable to thousands of businesses and millions of users.
These could for example be online search engines, marketplaces, social networking services, video-sharing platform services, web browsers or virtual assistants.
The DMA uses quantitative thresholds to determine gatekeeper status. Platforms that meet the thresholds of a yearly EU annual turnover above €7.5bn, a market capitalisation over €75bn, and 45 million active monthly end-users and 10,000 yearly business uses in the EU will be subject to the provisions of the DMA.
It is expected that Alphabet, Amazon, Apple, Meta, and Microsoft meet the criteria with an estimate of 15-20 companies suggested.
DMA law – requirements for Gatekeepers
- Side-loading Gatekeepers must allow electronic devices using their operating systems to uninstall pre-installed software and allow for the installation of third-party equivalents. Gatekeepers are required to endsure effective interoperability of operating systems, hardware and software.
- Self-preferencing When displaying goods and services to consumers, Gatekeepers need to apply transparent, fair and non-discriminatory ranking conditions. They are no longer allowed to treat their own goods and services more favourably than those of third parties that are using the gatekeeper platform to connect with consumers.
- Advertising transparency Gatekeepers are required to provide transparency on pricing and performance of advertising services. They must provide business users using the Gatekeeper’s advertising services with information concerning the price, fees and performance of the advertisements paid for by the business user.
- New rules on data Gatekeepers are prohibited from combining personal data from end-users collected through their core platform with data acquired from other services offered by them or third parties unless the user has given specific consent. They will also be required to facilitate effective data portability for data generated through its core platform.
Find out more about the EU Digital Markets Act here.
- Tech industry hiring steady but big tech layoffs a concernHuman Capital
- Consumer, employee trust a priority for business in 2023Leadership & Strategy
- How to use tech to engage employees in sustainabilitySustainability
- EY reveals Tech Operating Model Transformation ReportLeadership & Strategy