Digital Markets Act (DMA): agreement between the Council and the European Parliament

The Council and the Parliament today reached a provisional political agreement on the Digital Markets Act (DMA), which aims to make the digital sector fairer and more competitive.

Final technical work will make it possible to finalise the text in the coming days.

The European Union has had to impose record fines over the past 10 years for certain harmful business practices by very large digital players. The DMA will directly ban these practices and create a fairer and more competitive economic space for new players and European businesses. These rules are key to stimulating and unlocking digital markets, enhancing consumer choice, enabling better value sharing in the digital economy and boosting innovation. The European Union is the first to take such decisive action in this regard and I hope that others will join us soon.

Cédric O, French Minister of State with responsibility for Digital

The DMA defines clear rules for large online platforms. It aims to ensure that no large online platform that acts as a ‘gatekeeper’ for a large number of users abuses its position to the detriment of companies wishing to access such users.

Which platforms are considered gatekeepers?

The Council and the European Parliament agreed that for a platform to qualify as a gatekeeper, firstly it must either have had an annual turnover of at least €7.5 billion within the European Union (EU) in the past three years or have a market valuation of at least €75 billion, and secondly it must have at least 45 million monthly end users and at least 10 000 business users established in the EU.

The platform must also control one or more core platform services in at least three member states. These core platform services include marketplaces and app stores, search engines, social networking, cloud services, advertising services, voice assistants and web browsers.

To ensure that the rules laid down in the regulation are proportionate, SMEs are exempt from being identified as gatekeepers, apart from in exceptional cases. In order to ensure the progressive nature of the obligations, the category of ‘emerging gatekeeper’ is also provided for; this will enable the Commission to impose certain obligations on companies whose competitive position is proven but not yet sustainable.

Gatekeepers will have to:

• ensure that users have the right to unsubscribe from core platform services under similar conditions to subscription
• for the the most important software (e.g. web browsers), not require this software by default upon installation of the operating system
• ensure the interoperability of their instant messaging services’ basic functionalities
• allow app developers fair access to the supplementary functionalities of smartphones (e.g. NFC chip)
• give sellers access to their marketing or advertising performance data on the platform
• inform the European Commission of their acquisitions and mergers

But they can no longer:

• rank their own products or services higher than those of others (self-preferencing)
• reuse private data collected during a service for the purposes of another service
• establish unfair conditions for business users
• pre-install certain software applications
• require app developers to use certain services (e.g. payment systems or identity providers) in order to be listed in app stores

What if a gatekeeper does not play by the rules?

If a gatekeeper violates the rules laid down in the legislation, it risks a fine of up to 10% of its total worldwide turnover. For a repeat offence, a fine of up to 20% of its worldwide turnover may be imposed.

If a gatekeeper systematically fails to comply with the DMA, i.e. it violates the rules at least three times in eight years, the European Commission can open a market investigation and, if necessary, impose behavioural or structural remedies.

What if the platform does not agree that it is a gatekeeper?

If a platform has good arguments against its designation as a gatekeeper, it can challenge the designation by means of a specific procedure that enables the Commission to check the validity of those arguments.

Who makes sure that gatekeepers stick to the rules?

To ensure a high degree of harmonisation in the internal market, the European Commission will be the sole enforcer of the regulation. The Commission can decide to engage in regulatory dialogue to make sure gatekeepers have a clear understanding of the rules they have to abide by, and to specify their application where necessary.

An advisory committee and a high-level group will be set up to assist and facilitate the work of the European Commission. Member states will be able to empower national competition authorities to start investigations into possible infringements and transmit their findings to the Commission.

To make sure that gatekeepers do not undermine the rules set out in the DMA, the regulation also enforces anti-circumvention provisions.

Link to the Digital Services Act (DSA)

The co-legislators agreed that, whereas economic concerns deriving from a gatekeeper’s data collection will be addressed in the DMA, wider societal concerns should be tackled in the Digital Services Act (DSA). An agreement on the DSA is also expected shortly.

The DSA and the DMA will be the two pillars of digital regulation which respects European values and the European model, and will define a framework adapted to the economic and democratic footprint of digital giants.

Background

The European Commission presented a digital services package comprising the Digital Services Act (DSA) and a Digital Markets Act (DMA) in December 2020.

The DSA and the DMA will be the two pillars of digital regulation which respects European values and the European model, and will define a framework adapted to the economic and democratic footprint of digital giants.

On 25 November 2021, less than a year after the start of negotiations in the Council, member states unanimously agreed on the Council’s position on the DMA.

Next steps

The provisional agreement reached today is subject to approval by the Council and the European Parliament. The regulation must be implemented within six months after its entry into force.

On the Council’s side, the presidency aims to submit the agreement to the Permanent Representatives Committee (Coreper) for endorsement shortly.