The DMA is on – New rulebook for gatekeepers

√     EC’s long-awaited Digital Markets Act[1] (DMA) enters into force today, 1 November 2022, and will largely start being applicable as of 2 May 2023
√     Teaming with the Digital Services Act[2] (DSA) into the so-called Digital Services Pack, this very consequential legislation is EU’s promise for a level online playing field for big tech and small businesses alike, just as much as a safer and more accountable online environment for consumers

Broadly following a competition regulation mindset, the DMA acts as an ex-ante regulatory framework setting forth (i) notification obligations for gatekeepers based on pre-set thresholds, (ii) per se obligations to abide by, once deemed a gatekeeper, (iii) turnover-based fines, and even (iv) potential for private damages claims.

Who are the gatekeepers? Those digital platforms holding significant market power, enabling them to act as de facto private rulers in the online platform economy → gateways between businesses and consumers, posing the risk of bottlenecks in the digital economy.

How to assess? The three (cumulative) criteria test. Qualitative criteria assessable by corresponding quantitative thresholds:

Qualitative criteria Quantitative thresholds (rebuttable)
1. Significant impact on the internal market → 1. Annual TO EUR 7,5 billion / fair market value EUR 75 billion in the last financial year + provides the same CPS in at least 3 Member States
2. Provides a core platform service[3] (CPS) → 2. 45 million monthly active EU end users + 10k yearly active EU business users
3. Entrenched and durable position in its operations – currently/ foreseeable soon → 3. Threshold 2. above met for the past 3 financial years.

What if? Within 2 months as of its application (i.e., by 2 July 2023), the providers of CPSs meeting the quantitative thresholds must notify the European Commission (EC). Within 45 working days, the EC will designate them as gatekeepers, listing their relevant CPSs. Exceptionally, the presumed gatekeeper may rebut the presumption (i.e., prove that meeting the quantitative threshold does not entail satisfying the qualitative criteria). Absent notification, the EC may act ex officio.

What next? Once a gatekeeper, a tighter rulebook must be observed → art. 5 to 7 DMA. Essentially:

A gatekeeper cannot …

  • Push its own products in search results above those of other businesses.
  • Use data collected from competitors’ activity on its platforms to target promotion of its own products.
  • Track consumers’ across-web activity for targeted advertising, absent explicit consent.
  • Push consumers using its platforms towards its own products.

… but a gatekeeper must …

  • Foster free choice architecture → consumers’ possibility to install an app store, default search engine, web browser or voice assistant of their choice.

If not? Worldwide TO-based fines:

  • Up to 10% – infringement of gatekeeper obligations.
  • Up to 20% -repeated infringement within the past 8 years.
  • Up to 1% – failure to notify the EC/ other procedural infringements.

 

[1]          Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act), JO L 265, 12.10.2022.

[2]          Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services and amending Directive 2000/31/EC (Digital Services Act), JO L 277, 27.10.2022.

[3]          e.g., online intermediation services, search engines, social networking services, video-sharing platform services, web browsers, virtual assistants, cloud computing services, online advertising services.

 

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