• European Union regulators opened investigations into Apple, Google and Meta, the first cases under a sweeping new law designed to prevent Big Tech having an unfair advantage over competitors.

• The European Commission said it was investigating the companies for non-compliance with the Digital Markets Act (DMA).

Digital Markets Act

• Some large online platforms act as “gatekeepers” in digital markets. 

• Gatekeepers are large digital platforms providing so called core platform services, such as online search engines, app stores, and messenger services. 

• The Digital Markets Act is the EU’s law to make the markets in the digital sector fairer and more contestable. In order to do so, the Digital Markets Act (DMA) establishes a set of clearly defined objective criteria to identify “gatekeepers”.

• The DMA, together with the Digital Services Act, form a single set of rules that apply across the whole EU to create a safer digital space where the fundamental rights of users are protected and to establish a level playing field for businesses.

• The European Council adopted the DMA on July 18, 2022, and it entered into force on May 2, 2023.

To be considered a gatekeeper, a digital platform must:

i) Either have had an annual turnover within the European Union of at least €7.5 billion in the past three years or have a market valuation of at least €75 billion.

ii) Have at least 45 million monthly end users.

iii) Have at least 10,000 business users established in the EU.

iv) Control one or more core platform services in at least three member states.

• Due to their size, gatekeepers enjoy significant advantages over smaller competitors and have a dominant position in the digital market. 

• In September 2023, the European Commission designated for the first time six gatekeepers — Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft — under the Digital Markets Act (DMA). In total, 22 core platform services provided by those gatekeepers have been designated.

• Gatekeepers will have to comply with the do’s (i.e. obligations) and don’ts (i.e. prohibitions) listed in the DMA.

• The DMA is one of the first regulatory tools to comprehensively regulate the gatekeeper power of the largest digital companies. The DMA complements, but does not change EU competition rules, which continue to apply fully.

Gatekeepers will not be able to: 

i) Rank their own products or services higher than those of other companies.

ii) Prevent developers from using third-party payment platforms for app sales.

iii) Process users’ personal data for targeted advertising, unless consent is granted.

iv) Establish unfair conditions for business users.

v) Pre-install certain software applications or prevent users from easily un-installing them.

vi) Restrict business users of platforms.

What happens if gatekeepers do not comply with the rules?

• When a large online company has been identified as a gatekeeper, it has to comply with the rules of the DMA within six months.

• If a gatekeeper violates the rules laid down in the DMA, it risks a fine of up to 10 per cent of its total worldwide turnover. For a repeat offence, a fine of up to 20 per cent of its worldwide turnover may be imposed. 

• If a gatekeeper systematically fails to comply with the DMA, i.e. it violates the rules at least three times in eight years, the European Commission can open a market investigation and, if necessary, impose behavioural or structural remedies. 

Expected benefits of the Digital Markets Act:

• Business users who depend on gatekeepers to offer their services in the single market will have a fairer business environment.

• Innovators and technology startups will have new opportunities to compete and innovate in the online platform environment without having to comply with unfair terms and conditions limiting their development.

• Consumers will have more and better services to choose from, more opportunities to switch their provider if they wish so, direct access to services, and fairer prices.

• Gatekeepers will keep all opportunities to innovate and offer new services. They will simply not be allowed to use unfair practices towards the business users and customers that depend on them to gain an undue advantage.

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