EU targets big tech with new Digital Markets Act

The European Union wants to tackle issues of interoperability, data access and vendor self-preference with its landmark DMA legislation.

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European Union, 2018

Members of the European Union have confirmed the rules that will make up the new Digital Markets Act (DMA). The legislation is intended to rein in the power of large tech corporations such as Apple, Amazon, Google and Meta, forcing them to change how they integrate digital services and handle customer data.

In a press conference held early on Friday morning, Margrethe Vestager, the European Commission executive vice-president and commissioner for competition, said she expects the DMA to come into force “sometime in October.”

To date, any concerns around antitrust has been dealt with by the EU on a case-by-case basis. This legislation is intended to reform the system and address what are seen as systematic issues that exist within the market.

The text, which was provisionally agreed upon after an eight-hour long discussion between the EU Parliament, Council and Commission, targets large companies which are being called ‘gatekeepers’ which provide “core platform services” and are most likely to enact unfair business practices.

Initially this will include companies with a market capitalization of at least €75 billion (or sales in Europe of over €7.5 billion), at least 45 million monthly users in the EU, and provide certain digital services, such as web browsers, virtual assistants, messaging or social media applications.

Private chat apps such as WhatsApp and Facebook Messenger could be forced to interoperate, giving users more choice over how they send messages, without having to worry about what platform the recipient is on.

While the DMA is broad in scope and intended to enable a range of antitrust action, it also contains a number of specific demands for tech companies. Alongside the issue of interoperability, these also include the right to uninstall, personal data access controls, greater advertising transparency, an end to vendors self-preferencing their own services, and stopping certain app store requirements for developers.

If a gatekeeper company does not comply with the rules, the Commission will have the authority to impose a fine of up to 10% of a company’s total worldwide turnover from the preceding financial year, or 20% in the case of repeated infringements. If a company is found to be consistently infringing the legislation, the European Commission may ban them from acquiring other companies for a certain period of time.

Christian Ahlborn, partner and co-head of the technology sector at London-based law firm Linklaters said that, although some concessions have been made by all sides in the latest draft of the legislation, the parties involved in drawing up the legislation have also got their way with specific amendments.

“The inclusion of virtual assistants and web browsers in the legislation is a major win for the European Parliament,” he said. “The Council has, in turn, kept the threshold for qualifying as a “gatekeeper” lower than the European Parliament had wanted, ensuring a larger number of platforms will fall within the DMA’s scope.”

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