EU ambassadors approve ‘general approach’ to Digital Markets Act

The Digital Markets Act targets gatekeeper platforms, very large tech companies that have a critical role in the digital economy. [Koshiro K/Shutterstock]

Ambassadors from the 27-member European Union unanimously adopted their “general approach” to the DMA on Wednesday (10 November), bringing several modifications to the European Commission’s proposal to rein in the dominance of big players on the EU’s digital market.

The Digital Markets Act (DMA) is a landmark proposal to regulate large online platforms such as Amazon, Google or Facebook, which are designated as “gatekeepers” because they play a systemic role in the digital ecosystem.

EU diplomats endorsed amendments to the text on Wednesday, paving the way for its endorsement by the bloc’s ministers at the Competitiveness Council on 25 November.

“The compromise proposal provided by the Presidency represents an overall balanced package, which could allow for a General Approach by the Council. A broad consensus was reached,” says a document released after the meeting and seen by EURACTIV.

Once the ministers hash out their position, they will be ready to enter talks with the European Parliament in order to finalise approval of the DMA, a groundbreaking piece of legislation tabled in December 2020 that seeks to rein in the dominance of big players on the EU’s digital market.

EU countries reject strict deadline for DSA, DMA

A majority of EU countries have succeeded in rejecting the commitment to a tight timeline for an agreement on two key pieces of digital legislation that would have served well the French government ahead of the presidential elections there in April next year.

Designation, obligations and regulatory dialogue

The legislation provides that, when a platform meets certain criteria, the company is due to notify the European Commission to trigger the designation procedure.

Contrary to the EU Parliament, where the quantitative threshold in terms of market capitalisation and active users are the object of intense negotiations, EU countries left these criteria untouched. Rather, they decided to reduce the timeframe for the designation procedure.

According to the proposal, the qualitative remedies the EU regulator will be able to impose on the gatekeepers have been improved. In particular, the text introduces measures to avoid user lock-in through switching costs and behavioural bias as well as the so-called vertical integration of the gatekeeper’s different services, for instance with the combination of data from different sources.

The structure and the scope of obligations for gatekeepers (Art. 5 and Art. 6) were not significantly changed, although the general approach states that “improvements were made to make them clearer and ensure future-proofing and prevent circumvention.”

Only one obligation was added under Art. 6, specifying that users must be able to terminate the usage of the platform’s services without disproportionate conditions and undue difficulty.

The member states slightly modified the provisions on the regulatory dialogue (Art. 7), under which the gatekeeper can request the Commission whether the measures proposed effectively meet its obligations.

The EU executive has retained its discretionary power on whether to engage in such discussions, but it must do so “respecting equal treatment, proportionality and the principle of good administration.”

End-user definition

A new annex has been included in the proposal “to ensure legal clarity and speed up the designation process.” The annex provides a methodology for calculating the number of end-users – namely consumers, business users, and companies.

The definitions are specified based on the type of core platform service, and span across very different markets. These include online marketplaces, search engines, social networks, video-sharing platforms, number-independent interpersonal communication services (messaging apps), operating systems, cloud computing and advertising services.

The annex confirmed significant distance in the definition of core platform services compared to the proposal that is being discussed in the European Parliament.

Council document exposes significant differences with Parliament over gatekeeper definition

The definition of active users for core platform services is one of the main ways to identify a gatekeeper, but the services to be covered by this differ significantly in the texts submitted in the European Parliament and the Council, …

Enforcement

As is often the case for high-profile EU legislation, the enforcement architecture was a key part of the discussions in the EU Council.

A bid from Germany, France and the Netherlands to give stronger implementation powers to national authorities was rejected, with the European Commission remaining in the driving seat when it comes to enforcement. However, collaboration between the EU and national regulators has been further detailed (Art. 32a).

France, Germany, the Netherlands press for tighter rules in DMA

France, Germany and the Netherlands on Thursday (27 May) released a joint statement calling for a reinforcement of the EU’s Digital Markets Act (DMA) in a range of areas, from member states involvement to merger control. 

How the DMA will interact with national law was another important aspect. National authorities will be able to launch their own investigation, but they would then have to transmit the findings to the Commission as the “sole final enforcer.”

Similarly, if a member state launches an investigation under national law, but the findings show infringements of DMA provisions, the national regulator has to pass over the probe to the Commission.

EU countries also developed provisions defining the collaboration between national courts and the Commission (Art. 32b). To avoid fragmentation, the text provides that national tribunals cannot rule against previous decisions from the Commission, not even against “contemplated” decisions.

Future-proof

The Commission proposal gave the European Commission the power to adopt delegated acts to update the obligations for gatekeepers (Art. 10). These provisions were more developed, in particular in relation to the scope of the delegated acts.

The anti-circumvention rules were also further detailed, extending them at the designation stage (Art. 11). In particular, platforms are forbidden from dividing their business entities to avoid falling under the quantitative threshold of the DMA.

According to the text, the anti-circumvention provisions were brought more in line with the dynamic nature of digital markets, as the gatekeepers’ obligation “shall not be undermined by any behaviour of the gatekeeper, including the use of behavioural techniques or interface design.”

Following adoption of its general approach, the EU Council will be ready to launch negotiations with the European Parliament to finalise the adoption of the proposed DMA.

However, the Parliament is still struggling to find an agreement around key points such as killer acquisitions, scope, implementation and targeted advertising.

The outstanding issues on the DMA

The IMCO vote on the Digital Markets Act has officially been delayed, as some significant difference remain between the main political groups.

[Edited by Frédéric Simon]

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