The European Union may have just handed the US and North America its latest blueprint for regulating big tech with its new Digital Markets Act (DMA) legislation.
The DMA marks a concerted effort by the EU to give both big tech and the countries it operates in, outside of the US, a fair understanding of baseline reforms to antitrust concerns.
According to the News – European Parliament, “The Digital Markets Act (DMA) will blacklist certain practices used by large platforms acting as “gatekeepers” and enable the Commission to carry out market investigations and sanction non-compliant behavior.”
While the language needs to be finalized to get passed officially, the DMA is defining “gatekeepers” as businesses or firms with a minimum market capitalization of €75 billion equal to $82B and or €7.5 billion annually as well as 45 million monthly users that make use of an app or platform. By including the “or” the EU broadens the antitrust conversation to include big name players such as Facebook as well as unthought of ones such as Booking.com, according to The Verge.
Regarding the tertiary details, the DMA will be imbued with the power to fine “gatekeepers” up to 10 percent of total worldwide turnover from the preceding fiscal year and 20 percent for repeat infractions that fail to meet the following antitrust objective goals in the EU:
- Interoperability. Gatekeepers should allow their platforms to work with similar services from smaller third-parties. Exactly how this will be interpreted isn’t yet clear, but it could mean letting users on large messaging platforms like WhatsApp contact users on other platforms.
- The right to uninstall. Consumers are to be given more choice over software and services, particularly in mobile operating systems like iOS and Android. They should be able to uninstall any preloaded software, and be giving a choice when setting up a new device what service they want to use for applications like email and web browsing.
- Data access. Businesses should be able to access data they generate for larger platforms. This would mean, for example, letting companies who sell goods on platforms like Amazon access Amazon’s analytics about their performance.
- Advertising transparency. If a company buys adverts on Facebook, for example, they should be given the tools to independently verify the reach of their ads. Companies will also be barred from “combining personal data for targeted advertising” without explicit consent.
- An end to self-preferencing. Companies can’t use their platforms to put their products first. This means Google, for example, can’t put its shopping service at the top of its search results unless there is some sort of competitive tender for that spot.
- App store requirements. The commission says platform owners can no longer require app developers to “use certain services (e.g. payment systems or identity providers) in order to be listed in app stores.”
In reaction to the news of the DMA, both Google and Apple, prime targets of many of the antitrust stipulations, have issued their “concern” for the ruling, in the following responses:
We remain concerned that some provisions of the DMA will create unnecessary privacy and security vulnerabilities for our users while others will prohibit us from charging for intellectual property in which we invest a great deal. – Apple
“While we support many of the DMA’s ambitions around consumer choice and interoperability, we’re worried that some of these rules could reduce innovation and the choice available to Europeans. – Google
As Reuters notes, both Apple and Google have been lobbying against the passing of the DMA for some time now.
Despite the DMA being in the works for quite some time and deriving many of its tentpole objectives from real-world legislative battles in the EU, it remains early days for tech companies to digest the broad implications.
EU Commissioner for Competition, Margrethe Vestager seems optimistic about it officially passing and being implemented as early as October of 2022, which could give some “gatekeepers” as little as three months afterwards to make the necessary interoperability changes suggested by the DMA.