EU digital markets law has serious implications for Apple, Google, Amazon, Facebook and Microsoft
Companies like Apple, Google and Amazon could soon face fines of up to 20% of their global turnover, and even behavioral or structural remedies, when they break the rules set out in the European Union’s Digital Markets Act.
The Digital Markets Act defines rules for large online platforms, known as gatekeepers. In particular, its rules define what goalkeepers must do and what they can no longer do.
An organization is considered a gatekeeper if it has more than 45 million monthly active end users or 10,000 annual active business users. Gatekeepers have additionally achieved an annual turnover in the European Union of more than €7.5 billion or more in the last three financial years, or an average market capitalization of at least €75 billion. during the last fiscal year. They must also provide the same basic platform service in at least three Member States.
According to the DMA, core platform services means any of the following: online intermediation services, online search engines, online social networking services, video sharing platform services, number independent interpersonal communication services, operating systems, web browsers, virtual assistants, cloud computing services and online advertising services.
The list of prohibited activities addresses common anti-consumer and anti-competitive practices by custodians.
In particular, gatekeepers can no longer do the following:
- Pre-install “certain applications or software” or prevent users from “easily uninstalling” these products.
- Require software such as web browsers to be installed “by default when installing an operating system” (use some bundling practices).
- Prevent developers and businesses from using third-party payment platforms to sell apps.
- Give their services and products an unfair advantage by ranking them higher than other companies’ products.
- Use private data collected by one service “for the purposes of another service”.
- Imposing unfair conditions on professional users.
Companies like Apple, Microsoft, Google or Amazon are directly affected by DMA. Apple, for example, blocks third-party payment platforms, prohibits the use of other browser engines than its own and the installation of other application stores.
Google’s practice of pushing Android makers to include certain enterprise apps on Android could end, and Google Search can no longer push YouTube and other Google products on others.
Microsoft’s practice of heavily integrating Bing Search into Windows and preventing certain apps from being uninstalled on Windows would also violate the rules.
Other goalkeepers are also affected to varying degrees.
The Digital Markets Act defines new rules that guardians must follow alongside this.
- Unsubscribing from the main platform services should be as easy as subscribing.
- The basic functionalities of instant messaging services must be interoperable.
- Provide business users with “platform marketing and advertising performance data”.
- Inform the European Commission of acquisitions and mergers.
Controllers who fail to comply face fines of up to 10% of their worldwide turnover. Fines for repeat offenders can reach 20% of the gatekeeper’s worldwide turnover. Monitors who fail to comply at least three times in eight years may be subject to an open market investigation, which could lead to the imposition of behavioral or structural remedies.
The DMA is expected to be adopted by the European Council in September 2022. Once signed by the President of the European Parliament and the President of the Council, the DMA will start applying six months later. The complete DMA document is available here (PDF file).
The document lacks information on how certain changes can be made by gatekeepers. The interoperability requirement for instant messaging services alone raises questions about how to achieve this in a short time.
Now you: what do you think of DMA?