The Digital Markets Act (DMA) comes into force: new rules for Big Tech

On March 6, 2024, the European Union took a decisive step in regulating Big Tech with the full entry into force of the Digital Markets Act (DMA). This ambitious legislation aims to establish fairer competition and limit abuses of dominant position in the digital market. Through this reform, the EU seeks to reshape the rules of the game for players such as Google, Amazon, Apple and Facebook, which exert considerable influence on the global digital market.

In a context where a handful of companies largely dominate the digital market, how can the Digital Markets Act (DMA) rebalance the forces at play and foster fairer competition?

The Digital Markets Act: what is it?

The DMA is designed to target large online platforms, known as "gatekeepers", which exert disproportionate influence on the market. These web services are unavoidable hubs, which allows them to favor their own applications by giving them prominence on their platform. The criteria for being considered a gatekeeper include annual revenue of at least 6.5 billion euros within the EU, a market capitalization of at least 65 billion euros, and a base of at least 45 million monthly active end users and 10,000 business users.

Enforcement of the DMA is meant to ensure freer and more open competition on the web, for both businesses and users.

The main targets of the DMA are the GAFAM companies (Google, Apple, Facebook, Amazon and Microsoft) and China's ByteDance, the publisher of TikTok.

Objectives and key measures

The DMA has several objectives:

1. Preventing anti-competitive behavior: gatekeepers will no longer be able to favor their own services on their platforms.
2. Guaranteeing interoperability: platforms will have to allow interoperability with third-party services, thereby facilitating market diversification.
3. Transparency: the conditions for accessing platforms will have to be clear and fair.

Examples

• Google: with revenue of 257 billion dollars in 2021 and a dominant position in the search engine and online advertising markets, Google is directly affected by the DMA. For example, Google will have to refrain from giving an unfair advantage to its own online advertising services at the expense of smaller competitors. As a result, it removed its Maps service from its search engine, unfortunately turning some users against the European regulation.
• Apple: with a market capitalization exceeding 2,000 billion dollars, Apple will have to allow users to install applications from sources outside the App Store, a practice that until now was strictly controlled.
• Amazon: an e-commerce giant with annual revenue of 469 billion dollars in 2021, Amazon will have to stop using data from third-party sellers on its platform to favor its own products.

Impacts of the DMA

The DMA is expected to have a significant impact on the European digital landscape:

• Encouraging innovation: by lowering barriers to entry, start-ups and SMEs will have a better chance of competing with the industry giants.
• Consumer protection: a greater diversity of services and choices will be available, which will directly benefit consumers.
• Rebalancing power: by imposing strict rules on gatekeepers, the DMA aims to balance forces in the market, thereby reducing the risk of abuse of dominant position.

The role of the European Commission and potential penalties

To ensure compliance with the DMA, the European Commission has set up a team of experts. In the event of non-compliance, fines of up to 20% of the company's worldwide revenue may be imposed. As a last resort, the Commission has the power to require the divestment of part of the offending company's business.

The Digital Markets Act represents a major step forward in regulating the digital market, promising to make it fairer and more dynamic. By putting an end to certain anti-competitive practices by Big Tech, the EU hopes to stimulate innovation and offer consumers a more varied range of services. Through initiatives such as the Econumia game, the European Commission also aims to raise awareness and educate the various stakeholders about the importance of this legislation for a fairer digital future.

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