DMA: EU institutions agree on new rules for Big Tech

European Commissioner for Internal Market Thierry Breton (left), Executive Vice-President for Digital Margrethe Vestager (centre) and France's Secretary of State for Digital Cédric O (right) at the political trilogue on the Digital Markets Act). Sector of France [Ministère de l'Économie, des Finances et de la Relance]

The new EU regulation targeting tech giants will become fully applicable in 2023, following an agreement reached between the EU co-legislators on Thursday (24 March).

The European Council, Parliament and Commission have bridged their differences on the Digital Markets Act (DMA), a proposal targeted to a handful of platforms considered to have such a dominant market position to play a gatekeeper role between other companies and internet users.

In the past, competition authorities have struggled to keep up with the fast pace of competition online. Thus, the DMA is based on a completely different approach. The regulation includes a list of dos and don’ts that should apply ex-ante and reverses the burden of proof on the tech giants.

“Competition lawyers have tried to address gatekeeper issues in the past. But competition cases can take years and in the meantime, the harm to SMEs and innovators is done. We needed an innovative response. And we managed, against all odds and against all the lobbying,” said the EU’s Internal Market Commissioner Thierry Breton.

EU negotiators prepare to close in on Digital Markets Act

The EU institutions have been working towards an agreement on the gatekeeper obligations, scope and governance ahead of what might be the final high-level meeting next week.

Who are the gatekeepers

Several EU officials raised the ‘geopolitical’ issue during the negotiation, pointing out that the companies set to be designated as gatekeepers are mostly American, including Google, Amazon, Facebook, Apple, and Microsoft (GAFAM for short).

By contrast, the Parliament’s lead negotiator Andreas Schwab insisted on a narrower scope to concentrate the resources on the real ‘troublemakers’.

Schwab managed to raise the quantitative threshold to designate a gatekeeper to €7.5 billion in annual turnover and €75 billion in market capitalisation, making more remote the possibility that European companies such as Booking and Zalando might one day fall under the scope.

The original list of digital services contained intermediating services, online advertising, search engines, social media, video-sharing platforms, messaging services and operating systems. Upon insistence from MEPs, web browsers and virtual assistants were added.

DMA: EU lawmakers ready to trade digital governance for tighter obligations

EU lawmakers are preparing to make concessions on the governance of the Digital Markets Act to obtain more ambitious obligations for gatekeepers, according to an internal note seen by EURACTIV.

What will change

Gatekeepers will have to comply with obligations intended to make the market fairer, increase consumer choice and empower businesses to bypass the platforms to reach their customers.

Tech giants will be prevented from ‘bundling’, linking services together in a single package. Moreover, gatekeepers will be forbidden from combining data from different services, for instance, Facebook and Instagram, unless they obtain the user’s explicit consent.

Lawmakers obtained the interoperability of messaging services, meaning users will be able to send encrypted messages, images, videos and make calls from apps like WhatsApp to the likes of Signal and Telegram. Group chats were also included, but in this case, it will take up to three years to guarantee encryption.

MEPs also managed to introduce provisions on default settings. When purchasing a new device like a smartphone, a ‘choice screen’ will appear to offer consumers a choice of the type of virtual assistant and web browser they want, instead of having them by default. Users will also be able to delete pre-installed apps.

EU parliament adopts regulation targeting internet giants

EU lawmakers adopted their version of the Digital Markets Act (DMA) in a plenary vote on Wednesday (15 December), formalizing their mandate to enter interinstitutional negotiations on this key piece of digital legislation with the European Council and Commission.

Gatekeepers will be forbidden from favouring their services, forcing companies to use them or preventing them from using alternative channels with more favourable conditions. They will also need to ensure interoperability with their hardware and software free of charge.

Users might request to move the data they helped generate free of charge or ask a third party to do it for them.

Similarly, companies will be able to access their data and that of their customers in real-time and at no extra cost. For personal data, companies will need the consent of the user as per the EU privacy rules require consent, and the gatekeepers will have to facilitate this process.

Social media, app stores and search engines, in particular, will need to apply fair, reasonable and non-discriminatory conditions to other companies. Moreover, operating systems will have to allow alternative app stores, although they will be able to put in place cybersecurity requirements.

The negotiators agreed to move the ban on advertising targeting minors to the DMA’s sister proposal, the Digital Services Act. The political agreement is to be certified by a political statement on Friday morning, an EU official familiar with the issue told EURACTIV.

Advertisers will be able to access all the data related to their ads in real-time and free of charge to ensure they are getting the best value for money.

DSA: French Presidency pitches compromise on dark patterns, minors, compensation

Following the third political trilogue on the Digital Services Act (DSA) on Tuesday, the French Presidency prepared a compromise text on dark patterns, protection of minors and compensations, dated Wednesday (16 March).

Enforcement is key

As the DMA will start applying at the beginning of 2023, a transition period will follow to designate the gatekeepers and define how to best apply the new rules to them.

“Now we have to go from theory to practice. And to see if it works, we should constantly remind ourselves of the DMA’s two main objectives: contestability and fairness,” Tommaso Valletti, former chief competition economist at the European Commission, told EURACTIV.

While the Commission could blame past setbacks in the competition field on the inadequacy of the regulatory framework, once the DMA is in place, it will be under enormous pressure to meet the high expectations.

In the initial proposal, the EU executive anticipated up to 80 people working on DMA enforcement by 2025. In a letter in February, Parliament’s Schwab called for at least 220 staff members for the DMA task force.

[Edited by Zoran Radosavljevic]

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