Digital Markets Act
Regulation on contestable and fair markets in the digital sector (Digital Markets Act)
The objective of regulation is to create uniform regulation to prevent unfair trading practices that companies and consumers encounter when using the online platforms of the largest platform companies operating as so-called gatekeepers in the internal market.
Ensuring the competitiveness and fairness of digital services in the single market can promote innovation, high-quality digital products and services, reasonable and competitive prices and users’ freedom of choice.
Platform companies within the scope of the digital market regulation
The prohibitions and obligations laid down in the regulation applies only to the largest companies that provide the core platform services in the EU as defined in the regulation and that have specifically been named gatekeepers under the regulation. Core platform services include search engines, operating systems, social networking services, video sharing platform services, number-independent interpersonal communications services, web browsers, virtual assistants, cloud services, advertising services and various online intermediation services, such as marketplaces.
Companies providing core platform services could be designated as gatekeepers if they
- have a significant impact on the internal market,
- offer a core platform service that serves as an important gateway for business users to reach end users, and
- enjoy, or are expected to enjoy, an entrenched and durable position in the market.
The regulation defines thresholds, based on which companies would be presumed to be gatekeepers. A company must have had an annual turnover of at least EUR 7.5 billion over the past three years within the European Union, or have a market valuation of at least EUR 75 billion.
In addition, the company must have at least 45 million end users per month and at least 10,000 business users established in the EU. The company must provide one or more core platform services in at least three EU Member States.
However, companies may seek to rebut such presumptions.
Obligations of a gatekeeper
The Digital Markets Act imposes certain obligations and prohibitions on gatekeepers, which they have to comply with in their daily activities to ensure a fair and open digital market.
The gatekeepers must, for example,:
- allow the installation and effective use of third party software applications or software application stores in the gatekeeper’s own operating system,
- allow service providers and equipment suppliers free of charge access to hardware or software features (for example, for application developers access to additional functions on smartphones),
- provide effective portability of data generated through the activity of an end user,
- ensure the compatibility of the basic functions of different messaging services, such as sending messages and making voice calls between different communication services,
- notify the Commission of certain planned corporate acquisitions and mergers.
Gatekeepers can no longer, for example,:
- rank more favourably their own services or products compared to similar third-party services or products,
- connect personal data between different services without the consent of the person concerned,
- require the use of the gatekeeper’s own payment or identification service as a condition for the use of a core platform service,
- prevent end users from un-installing any pre-installed software applications,
- introduce practices that make it difficult for end users to terminate the use of the core platform service.
Enforcement and sanctions for violating the regulation
The European Commission will be responsible for enforcing the regulation. The regulation will authorise the Commission to conduct market investigations to supervise compliance with the regulation and to ensure the regulation remains up-to-date. The Commission will also have the power to request information, conduct inspections and interview any natural or legal person which consents to being interviewed.
If a gatekeeper has systematically infringed the obligations laid down in the regulation and maintained, strengthened or expanded its position as a gatekeeper, behavioural or structural remedies may be imposed on it after a market investigation. They must be proportionate to the infringement committed and necessary to ensure compliance with the obligations laid down in the regulation.
A fine, which may not exceed 10% of the company’s total worldwide turnover, can also be imposed on a gatekeeper. In case a gatekeeper repeatedly violates the same obligation, it may face a fine of at most 20%. In certain situations, the Commission can also impose a periodic penalty payment that does not exceed 5% of the company’s average daily turnover for the previous financial year. A periodic penalty payment can also be imposed on a company other than a gatekeeper.
Entry into force and application
The regulation will enter into force 1 November 2022. The regulation will start to 2 May 2023.
- Regulation (EU) 2022/1925 of the European Parliament and the of the Council
- Press release by Commission, 31 October 2022: Digital Markets Act: rules for digital gatekeepers to ensure open markets enter into force
- Press release by Council, 18 July 2022: DMA: Council gives final approval to new rules for fair competition online