EU to regulate Big Tech Companies with Digital Markets Act.
Digital Markets Act: Commission designates six gatekeepers.
The European Commission has today 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 gatekeepers have been designated. The six gatekeepers will now have six months to ensure full compliance with the DMA obligations for each of their designated core platform services.
Under the DMA, the European Commission can designate digital platforms as ‘gatekeepers’ if they provide an important gateway between businesses and consumers in relation to core platform services. Today’s designation decisions follow a 45-day review process conducted by the Commission after the notification by Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft and Samsung of their potential status as gatekeepers. In particular, the Commission has established gatekeeper status with respect to the following specific core platform services:
In parallel, the Commission has opened four market investigations to further assess Microsoft’s and Apple’s submissions arguing that, despite meeting the thresholds, some of their core platform services do not qualify as gateways:
- Microsoft: Bing, Edge and Microsoft Advertising
- Apple: iMessage
Under the DMA, these investigations aim to ascertain whether a sufficiently substantiated rebuttal presented by the companies, demonstrate that services in question should not be designated. The investigation should be completed within a maximum of 5 months.
In addition, the Commission has opened a market investigation to further assess whether Apple’s iPadOS should be designated as gatekeeper, despite not meeting the thresholds. Under the DMA, this investigation should be completed within a maximum of 12 months.
In addition, the Commission has concluded that, although Gmail, Outlook.com and Samsung Internet Browser meet the thresholds under the DMA to qualify as a gatekeeper, Alphabet, Microsoft and Samsung provided sufficiently justified arguments showing that these services do not qualify as gateways for the respective core platform services. Therefore, the Commission decided not to designate Gmail, Outlook.com and Samsung Internet Browser as core platform services. It follows that Samsung is not designated as gatekeeper with respect to any core platform service.
Next steps for designated gatekeepers
Following their designation, gatekeepers now have six months to comply with the full list of do’s and don’ts under the DMA, offering more choice and more freedom to end users and business users of the gatekeepers’ services. However, some of the obligations will start applying as of designation, for example, the obligation to inform the Commission of any intended concentration. It is for the designated companies to ensure and demonstrate effective compliance. To this end, they have 6 months to submit a detailed compliance report in which they outline how they comply with each of the obligations of the DMA.
The Commission will monitor the effective implementation of and compliance with these obligations. In case a gatekeeper does not comply with the obligations laid down by the DMA, the Commission can impose fines up to 10% of the company’s total worldwide turnover, which can go up to 20% in case of repeated infringement. In case of systematic infringements, the Commission is also empowered to adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.
In the future, additional companies could submit notifications to the Commission under the DMA, based on their self-assessment with respect to the relevant thresholds. In this context, the Commission maintains constructive discussions with all relevant companies.
Digital Markets Act
The DMA aims at preventing gatekeepers from imposing unfair conditions on businesses and end users and at ensuring the openness of important digital services.
Together with the DMA, in December 2020, the Commission also proposed the Digital Services Act, to address the negative consequences arising from certain behaviours by online platforms acting as digital gatekeepers to the EU single market.
The DMA, in force since November 2022 and applied since May 2023, aims to ensure contestable and fair markets in the digital sector. It regulates gatekeepers, large online platforms that provide an important gateway between business users and consumers, whose position can grant them the power to create a bottleneck in the digital economy.
Companies providing at least one of the ten core platform services enumerated in the DMA are presumed to be gatekeepers if they meet the criteria listed below. These core platform services are: online intermediation services such as app stores, online search engines, social networking services, certain messaging services, video sharing platform services, virtual assistants, web browsers, cloud computing services, operating systems, online marketplaces, and advertising services. One company can be designated as gatekeeper for several core platform services.
There are three main quantitative criteria that create the presumption that a company is a gatekeeper as defined in the DMA: (i) when the company achieves a certain annual turnover in the European Economic Area and it provides a core platform service in at least three EU Member States;(ii) when the company provides a core platform service to more than 45 million monthly active end users established or located in the EU and to more than 10,000 yearly active business users established in the EU; and (iii) when the company met the second criterion during the last three years.
The DMA defines a series of specific obligations that gatekeepers will need to respect, including prohibiting them from engaging in certain behaviours in a list of do’s and don’ts.
The DMA also empowers the Commission to conduct market investigations to: (i) designate companies as gatekeepers on qualitative grounds; (ii) update the obligations for gatekeepers when necessary; (iii) design remedies to tackle systematic infringements of the Digital Markets Act rules.