We’ve reported before on the Digital Markets Act (DMA) and the complex process of finding the right solutions to reign in Big Tech while addressing security concerns and preserving end-to-end encryption.
After almost a year and a half of intense negotiations, the European Union finally adopts the long-awaited legislation, the DMA, that will curb the power of digital gatekeepers, create a fairer competition environment for smaller businesses and protect consumers from some of the data collection and unethical advertising practices that have become the norm.
Two weeks ago, EU lawmakers designated 19 very large online platforms (VLOPs) that are subject to the DMA’s sister regulation, the Digital Services Act (DSA), which redefines the unions ecommerce governance regime.
It is expected that the DMA will also apply to all of the companies on this list, with others joining them if they meet the criteria:
Providing a “core platform service” (these include online search engines, social networking services, app stores, certain messaging services, virtual assistants, web browsers, operating systems and online intermediation services) in at least 3 EU states
Reporting annual revenue in the European Economic Area that hit or exceeded €7.5 billion in each of the last three financial years; or else having an average market capitalisation “or equivalent fair market value” that amounted to at least €75BN in the last financial year
Having 45M+ monthly active end users in the EU and more than 10,000 yearly active EU business users in the last financial year
Having met the previous criteria in each of the last three financial years.
In Addition, the Commission may also apply a subset of DMA rules to companies it suspects will soon become gatekeepers.
In a press release the EU Commission clarifies what comes next with the Digital Markets Act: “potential gatekeepers that meet the quantitative thresholds established have until 3 July to notify their core platform services to the Commission. The Commission will then have 45 working days (until 6 September 2023) to decide whether the company meets the thresholds and to designate gatekeepers. Following their designation, gatekeepers will have six months (i.e. until 6 March 2024) to comply with the requirements in the DMA.”
There’s been a lot of drama surrounding the negotiations for defining the DMA, with some of the more legitimate concerns having to do with the demand for inter-operability between messaging services and how that could impact end-to-end encryption.
The digital gatekeepers will surely include the ‘usual suspects’: Google, Facebook, Amazon and Apple, as well as Alibaba and Booking.
The biggest news for consumers is that under the Digital Market's Act the gatekeepers will no longer be able to combine personal data from different sources or deliver targeted ads without the user’s consent.
And an important aspect of the Commission’s ability to enforce this legislation is the shift to outlawing Big Tech’s abuse of power outright, or ex-ante intervention, from the past methods of playing catch-up, having to gather evidence of past misconduct and then going through the court system before any action can be taken.
As expected, gatekeepers weren’t going to agree to these types of changes that can impact their massive profits without trying to fight them (and some still whining about being treated unfairly).
The tech lobby DigitalEurope, which represents players like Amazon, Apple, Facebook's parent company Meta and Google, tried unsuccessfully to eliminate some of these measures. Apple CEO Tim Cook has said that these efforts would “destroy the security of the iPhone.” An Apple spokesperson stated that some of the DMA provisions “will prohibit us from charging for intellectual property in which we invest a great deal”. Meta’s president of global affairs, Nick Clegg, has said that the rules would “fossilize” innovation in the digital economy. This must be so hard for them…
On top of all this, a series of letters had been dispatched from U.S. government departments to Brussels lawmakers, highlighting concerns that the move disproportionately affected American businesses. That narrative, however — which primarily came from the U.S. Commerce Department — was eventually toned down, after the White House came out in support of clamping down on Big Tech abuses.
As the Overton window shifts against Big Tech all over the world, these changes brought to us by the DSA and DMA are worth celebrating.
We hope more countries start making this shift. The next one to keep an eye on: the UK and their Digital Markets, Competition and Consumer Bill (DMCC Bill) which has now been published and introduced before Parliament.
The DMA - and also the DSA - are great approaches to limit the power of Big Tech in the European Union. While these laws are not perfect, they are great steps in the right direction.
Just like the GDPR, the EU is setting the bar on how to handle Big Tech, their market dominance and their privacy abuses.
The future will show how the EU can also enforce the new regulation. However, in regards to the GDPR, the EU has started to really push against Big Tech abuses like recent court decisions show where Google Analytics has been declared illegal in Europe or Facebook has received a huge fine because of their tracking business model.
The DMA and the DSA will curb the power of digital gatekeepers, ultimately creating a fairer competition environment and - hopefully - better privacy protections for everyone.