Articles

Digital Markets Act: Responsibilities of the Major Digital Platforms and Benefits Brought by the DMA

Introduction

This month marks one year of the entry into force of the digital space reform initiated by the European Commission (the “Commission” or the “EC”), aiming to transform the digital environment into a safer space for users of digital services, by establishing new rules for all digital services, including social networks, search engines, app stores, online marketplaces and other online platforms that operate in the European Union.

The EU Digital Markets Act (“DMA”)[1] is part of the legislative package proposed by the Commission together with the EU Digital Services Act (“DSA”)[2], which we have previously navigated in a separate article, explaining the purpose and impact of the DSA within the digital landscape. Both pieces of legislation will become fully applicable in less than 4 months (i.e., 17 February 2024 for the DSA and 7 March 2024 for the DMA).

How does the DMA restore balance in digital markets that were centred around a few prominent platforms? How will the DMA influence competition in the digital environment? Who benefits from the DMA rules? How do DMA, DSA, and other legislations interconnect?

Our article, organised into three parts, will tackle these questions.
In this first part, we will outline the DMA regulatory content, identify its applicability, and provide a chronological overview of events within the past year, since it came into force.
In the second part, we will explore the dos and don’ts of major digital platforms under the DMA, examine the penalties they encounter for non-compliance, delve into the role of the European Commission, and assess the tools accessible to users.
In the third part, we will talk about the beneficiaries of the DMA and explore the interconnections between DMA, DSA and other European legislative acts.

Scope of Application

In a nutshell, the DMA aims to redress the balance in digital markets by imposing a series of prohibitions and obligations on major providers of the core platform services that have exercised important influence online over the last 10 years, acting as digital “gatekeepers” to the single market. These are platforms that have a significant impact on the internal market and serve as an important gateway for business users to reach their customers[3]. The ultimate goal is to better-protect consumers and business users against unfair practices. For example, the DMA will ban practices such as: blocking users from uninstalling pre-installed applications, ranking their own products higher in the hierarchy than those of competitors, tracking end-users outside of the platform’s core service for the purpose of targeted advertising without consent, or forcing app developers to use certain services, such as payment or identification systems, to be listed in app stores[4]. Also, the DMA will enable business users to promote offers and conclude contracts with their customers outside the platform. Such measures will enable and encourage the expansion of smaller platforms, e.g., small and medium-sized enterprises, and start-ups, giving them easier access to customers, and thus creating better business opportunities and innovation.

Timeline

The DMA rules entered into force on 1 November 2022 and started to apply on 2 May 2023. In this context, the major providers of core platform services had to notify the Commission by 3 July 2023 if they met the quantitative thresholds to be qualified as a gatekeeper and provide all necessary information. Providers of core platform services that do not meet the thresholds until a later point will have to notify the Commission within two months of reaching these thresholds.

Further, on 6 September 2023, the Commission designated the gatekeepers for DMA purposes, who will have to ensure compliance with the obligations and prohibitions stated in the DMA within 6 months, i.e., until 7 March 2024 (the designation decisions issued by the Commission may be reviewed here).

Later, on 9 October 2023, the Commission published the template for the compliance report that designated gatekeepers will need to submit under the DMA by 7 March 2024 and update at least once per year.

To gain a clearer overview of these events, including the timeline of the DSA, please take a look at the chart below.

Gatekeepers & Core Platform Services

The DMA shall apply only to undertakings (i) that provide core platform services (“CPSs”) and (ii) which are subsequently designated as ‘gatekeepers’. In simpler words, only services deemed crucial enough to warrant regulation will be subject to DMA oversight.

The DMA encompasses an extensive array of CPSs, such as:
online intermediation services (e.g., Amazon Marketplace, App Store, Google Maps, Google Play, Google Shopping, Meta Marketplace);
online search engines (e.g., Google Search, Microsoft Bing);
online social networking services (e.g., Facebook, Instagram, TikTok, LinkedIn);
video-sharing platform services (e.g., YouTube);
number-independent interpersonal communications services (e.g., WhatsApp, Messenger, iMessage);
operating systems (e.g., Android, iOS, Windows);
web browsers (e.g., Chrome, Safari, Edge);
virtual assistants (e.g., Siri, Alexa);
cloud computing services (e.g., OneDrive, Google Drive, iCloud);
online advertising services (including any advertising networks, advertising exchanges and any other advertising intermediation services), provided by an undertaking that provides any of the CPSs listed above (e.g., the online advertising services provided by Google, Amazon, Meta, Microsoft).

As already anticipated above, on 6 September 2023, the Commission officially designated six gatekeepers under the DMA, i.e., Alphabet (8 CPSs), Amazon (2 CPSs), Apple (3 CPSs), ByteDance (1 CPS), Meta (6 CPSs) and Microsoft (2 CPSs), covering 22 CPSs (see below a chart depicting each gatekeeper and its corresponding CPS). The Commission’s designation process was conducted after reviewing the notifications submitted by the aforementioned companies concerning their potential gatekeeper status. These gatekeepers will now have six months to fully adhere to the DMA’s obligations, until 7 March 2024, for each of their designated CPS.

Nevertheless, this list may not be final. The Commission has opened no less than four market investigations to conduct additional assessments of the claims made by Microsoft and Apple. These companies assert that, although meeting the thresholds, certain CPSs they provide should not be actually classified as gateways, namely: (i) for Microsoft – Bing (as an online search engine), Edge (as a web browser) and Microsoft Advertising (as an online advertising service) and (ii) for Apple – iMessage (as a number-independent interpersonal communications service). These enquiries, which must be finalised within a maximum of five months from  the date of their opening, seek to determine whether the respective companies can prove that their CPSs should not be designated as such under the DMA.

Moreover, the Commission has also initiated a market investigation to delve deeper into whether Apple’s iPadOS should be labelled as a gatekeeper, even if it does not meet the thresholds. According to the DMA, this enquiry must be finalised within a maximum of 12 months from the date of opening of the market investigation.

Not least, the Commission determined that, despite meeting the thresholds set by the DMA to be considered gatekeepers, Alphabet, Microsoft and Samsung had presented valid reasons to demonstrate that Gmail, Outlook.com and Samsung Internet Browser do not actually serve as gateways for their respective CPS. Consequently, the Commission chose not to label these three services as CPSs. As a result, Samsung is currently not recognised as a gatekeeper in relation to any CPSs under the DMA.

Criteria and Thresholds For Becoming a Gatekeeper

In order to be designated as a gatekeeper, the provider of a CPS has to cumulatively fulfil three criteria, which are qualitative in nature. These criteria are, however, presumed to be met when specific quantitative thresholds are achieved. Essentially, the DMA creates an assumption that the qualitative criteria are fulfilled when a CPS provider reaches the specified quantitative thresholds. Nonetheless, this presumption can be rebutted, as explained earlier above in the case of Gmail, Outlook.com and Samsung Internet Browser, whereby the providers of these CPSs managed to successfully convince the Commission about their non-gatekeeper status.

Under the qualitative criteria assessment, a provider of CPS shall be designated as a gatekeeper if it meets the following:
it has a significant impact on the internal market;
it provides a CPS which is an important gateway for business users to reach end users; and
it enjoys an entrenched and durable position, in its operations, or it is foreseeable that it will enjoy such a position in the near future.

For each of the above criteria, there are quantitative thresholds which, if met, create a rebuttable presumption that the qualitative criteria are met:
a significant impact is presumed if the undertaking (a) provides the same CPS in at least three Member States, and (b) achieves (i) an annual EU turnover equal to or above EUR 7,5 billion in each of the last three financial years, or (ii) an average market capitalisation or equivalent fair market value of at least EUR 75 billion in the last financial year;
an important gateway is assumed if the undertaking provides a CPS that, in the last financial year, has (a) at least 45 million monthly active end users established or located in the EU, and (b) at least 10,000 yearly active business users established in the EU;
an entrenched and durable position is inferred if the thresholds mentioned in the previous subparagraph were met in each of the last three financial years.

Designation of Gatekeepers

Providers that reach these quantitative thresholds must self-assess whether they qualify as gatekeepers and therefore notify the EC without delay, within two months after said thresholds are met, also providing all the relevant information. Nevertheless, the provider can rebut the legal presumption and still argue that it does not meet the qualitative criteria for gatekeeper status. The Commission shall designate a gatekeeper within 45 days of receiving complete information if all thresholds are met and may then add the respective provider to a publicly available list of gatekeepers, also specifying their CPSs. However, the Commission may also designate providers of CPSs as gatekeepers if, after conducting a market investigation, it finds that they meet the qualitative criteria even though they do not meet the quantitative thresholds.

The gatekeeper shall submit a compliance report to the EC describing in detail the measures it has implemented to ensure compliance with the obligations laid down in the DMA within six months of its designation.

Review of the Gatekeeper Status

The gatekeeper list will undergo periodic reviews, at a minimum of every three years, to ensure its accuracy. What’s more, the gatekeeper status can be amended by the EC, upon request or ex officio, at any point either (i) due to substantial changes in any of the facts on which the designation was based, or (ii) if the designation decision was based on incomplete, incorrect or misleading information.

Bound by the Rules

The DMA also includes an anti-circumvention provision. Providers of CPSs are not allowed to avoid their designation as gatekeepers by artificially segmenting, (sub)dividing, fragmenting or splitting their CPSs, through contractual, commercial, technical or any other means, in order to circumvent the quantitative thresholds.

[1] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act).

[2] Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services and amending Directive 2000/31/EC (Digital Services Act).

[3]  https://digital-strategy.ec.europa.eu/sk/node/418/printable/pdf

[4] http://www.competition.ro/wp-content/uploads/2023/07/High-Level-Group-DMA.pdf.

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