The Digital Markets Act legislative proposal has been endorsed with an overwhelming majority by a key European Parliament committee and will now be voted on in the December plenary session.
On Tuesday (23 November), the Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) approved the DMA following lengthy discussions, negotiations, and compromises.
The Digital Markets Act is a draft EU law intended to impose specific obligations on gatekeeper platforms. Given the fast-paced nature of the internet economy, these obligations would apply ex-ante instead of ex-post, which is usually the case with competition policy.
“The current competition rules are not enough. They allow the digital giants to fully exploit their market power and impose their own rules on the markets. The Digital Markets Act will ban these unfair practices,” leading negotiator Andreas Schwab said.
The key differences among the main political groups were finally settled in a compromise last week.
Scope and enforcement
Schwab pushed for concentrating on a handful of Big Tech companies while other political groups wanted to keep the scope the same or even enlarge it.
The quantitative thresholds were slightly increased, but the number of digital markets considered was kept to just one. As a result, Booking and other European companies are likely to fall under the DMA.
The reason for restricting scope was to concentrate enforcement resources on the largest platforms. Instead, the involvement of national competition authorities was enhanced, as they will advise the European Commission and contribute to the investigations.
The list of digital markets was also extended to include connected TVs, virtual assistants and web browsers.
Eighteen digital trade associations published a joint letter last week criticising these measures for giving the EU executive too much discretion and for extending the scope “beyond the evidence base.”
Other fundamental additions to the DMA were provisions against killer acquisitions. The proposal was initially not well received by the Commission, which feared such measures would go against the legal basis.
The compromise provides that in cases of systematic non-compliance, the Commission would temporarily block takeovers of relevant companies.
The definition of relevance was found in data-related activities. “The use of the data is the important aspect. We agreed on this principle,” explained Marcel Kolaja, who represented the Greens in the negotiations.
Moreover, three last-minute amendments from the ECON committee (economic and monetary affairs) were approved in the final committee vote, enlarging the scope of the notification obligations to any acquisition attempt.
The fines for systematic non-compliance were also harsher, with the minimum set at 4% of the annual turnover and the maximum doubled to 20%.
“The ECON committee has improved the text by clarifying and strengthening critical issues such as fines, information on concentrations, compliance and governance,” said ECON rapporteur Stéphanie Yon-Courtin.
Targeted ads were another contention point among EU lawmakers, with political groups left of the centre pushing for a total ban on targeted advertising.
The compromise found consists in banning microtargeting for minors, a solution that is now being mirrored in the negotiations for the DMA’s sister proposal, the Digital Services Act (DSA).
“Such specific measures for minors have the huge downside that to implement them, online platforms first need to collect verifiable age information about everyone,” Jan Penfrat, a senior policy adviser at European Digital Rights (EDRi), told EURACTIV.
Limitations were also introduced in processing sensitive information such as political views, religious beliefs and sexual orientation. Platforms will need to require users’ explicit consent to process personal data, reinforcing the EU’s privacy law provisions, the GDPR.
The DMA opens the door to sideloading, obliging operating systems to open access to multiple app stores. Apple vehemently opposed the measure arguing it would compromise iPhone security. Nonetheless, gatekeepers will be able to set their own security standards.
The scope of self-preferencing provisions was extended to any type of self-preference, including app stores, and not just the ranking system, as in a search result. Users will be able to delete default apps, which were not forbidden for preinstallation, as some asked.
“This can be a missed opportunity, as the default settings of a device are very powerful: 95% of users never change the default settings of their smartphones,” said Sebastiano Toffaletti, secretary-general at the European Digital SME Alliance.
However, these measures were considered making life too complicated for vulnerable users, EURACTIV was told.
The new version of the text includes obligations for the interoperability of messaging services and social media. “Consumers will not be forced to use a specific messenger but will be able to cross chat between different applications,” said social-democrat MEP Evelyne Gebhardt.
In other words, a message sent on WhatsApp might be received on Messenger or Signal and vice versa. The Commission would have 18 months to set up the appropriate technical specifications.
“Technically, it’s not really complicated. What you need is a protocol to send and receive messages, a standard to make networks interconnected and interoperable,” added Kolaja.
[Edited by Alice Taylor]