On March 6, the EU’s “Digital Markets Act” (DMA) went into effect, establishing the world’s most comprehensive rules governing the operations of six technological behemoths and aimed at defending competition. Following the EU’s lead, similar restrictions could be implemented in other nations. However, the regulation has been delayed and insufficient.
How the EU arrived at the new rules
For many years, EU authorities have been closely monitoring technological behemoths. The European Commission is particularly worried about these corporations’ monopolistic position, which allows them to affect not only the whole market but also their smaller European competitors and individual customers’ chances. Margrethe Vestager, Vice-President of the European Commission for Digital Policy and Commissioner for Competition rose to prominence in her fight against technological businesses.
EU authorities often fine technological corporations large sums: the laws allow for fines based on the corporation’s overall revenue. For example 2016, the European Commission imposed a record €13 billion fine against Apple for obtaining tax breaks in Ireland. In 2018, Google was fined €4.3 billion for antitrust violations. On March 5, the European Commission penalised Apple €1.8 billion for misuse in the music streaming services market.
However, it is no longer limited to individual measures against individual firms. The “Digital Markets Act” (DMA) applies to companies whom the EU considers “gatekeepers” of the digital market.
It refers to companies with a market valuation of €75 billion or an annual EU turnover of €7.5 billion. Another requirement for inclusion on the list is at least 45 million monthly active users and 10,000 business users from EU countries.
Furthermore, the company must have at least one major internet platform with significant clout in the EU and activities in multiple bloc nations. As a result, the list includes five American companies: Alphabet, Amazon, Apple, Meta, Microsoft, and China’s ByteDance.
The European Commission introduced the “Digital Markets Act” in December 2020, and since then, its norms have been carefully coordinated at multiple levels within the EU. In 2022, the Council of Europe, the European Parliament, and EU member states all ratified it. It went into effect in 2023, albeit only partially. Beginning March 6, the DMA will be wholly enforced.
The “Digital Services Act” (DSA), created concurrently with the DMA, went into full effect in February. It provides new, more precise standards for large digital platforms’ responsibilities in countering illegal or harmful content and protecting users’ fundamental rights to free expression and personal data protection.
What the DMA regulates
Among other things, companies must now allow consumers to unsubscribe from critical platform services, ensuring they have the same conditions as those who subscribe to such services. Another aspect of the regulation states that companies cannot install vital software (such as browsers) from the same platform while installing an operating system.
Companies must allow customers to download applications from third-party applications and use third-party payment systems within mobile operating systems. Another requirement is to assure interoperability with various messaging services.
Technological powerhouses are now barred from, among other things: the platform may favour its products and services, use user data for other services, unfairly treat corporate users, and pre-install specific applications.
The DMA provides huge fines for violators: up to 10% of global turnover for a first offence and up to 20% for a repeat offence. In extreme cases, the European Commission may demand structural changes up to the division of the business.
The law’s principal goal is to force technological behemoths to evaluate their methods so that smaller businesses can compete with them. The European Commission has chosen 22 important services from these behemoths, including YouTube and TikTok for video, Google Search for search engines, Windows, Android, and iOS for operating systems, Safari and Chrome for browsers, and Amazon for marketplaces. The list also includes Facebook, Instagram, and Meta’s messaging platform WhatsApp.
For example, Apple is now compelled to provide European iPhone and iPad users access to competing app shops and payment systems. Microsoft, on the other side, must refrain from actively pushing its Bing search engine among Windows users.
Google must present Android users with a “choice screen,” which allows them to select between other search engines and browsers. Another change is that Google must remove its flight search service widget from the top of search results in Europe and make rivals’ services more prominent.
Most companies on the list will need to implement many changes, such as refraining from sharing data between different services owned by the same corporation.
A Turning Point or Yesterday’s Regulation
“This is a turning point. Self-regulation is over,” Margrethe Vestager said in connection with the DMA’s coming into force, pointing out that previously, technology companies largely determined their own practices of this kind.
Thierry Breton, the European Commissioner for the Internal Market, has been actively consulting with high-tech companies in recent years. He observes that, unlike the EU, the US authorities have failed to impose harsher rules on these companies despite many years of trying.
According to the European Commissioner, only a few years ago, these companies assumed that even EU authorities could not impose tough regulations.
According to Bloomberg, whereas Vestager largely wants to create limitations for technological businesses, Breton seeks a more active EU policy in this area, supporting European companies against corporations from China and the United States.
Key Observations
The new European restrictions and laws enacted by other countries governing high-tech enterprises will result in differing technology from country to country.
This shows the maturity of the technology business, which increasingly resembles more traditional sectors that must adapt to local legislation in several nations.
There is a risk that digital protectionism could become the global standard. Given the EU’s ability to apply regulations outside its borders, it must exercise caution when exporting both good and bad rules.
It is still unclear whether the new regulation will allow other companies to compete more successfully with the internet behemoths.
Many European technology industry representatives question the law’s effectiveness, citing that tech companies may discover workarounds and loopholes to legally comply with the DMA without changing their behaviour.
Concerns have been raised concerning the EU’s ability to monitor compliance properly, given that technology companies have essentially unlimited resources to oppose regulation.
Some say authorities and legislators are attempting to regulate the business in ways they do not fully comprehend.
Some experts don’t think that the new rules, like letting users pick their own search engine, would actually make the market more competitive since people may still stick with options they’ve used for years.
Critics of the DMA note that there are opportunities to circumvent the law without formally violating it in most cases. Apple, for example, has already permitted users to download software other than those from its App Store, although there is a €0.5 charge for each download. This makes such an option inconvenient for many app developers, particularly those who create free apps.
Critics also point out that the European Commission regulates outdated technologies. While search engines and app downloads are vital now, the advancement of artificial intelligence has presented a new challenge. Furthermore, the European Commission only started working on the rule governing this area last year and won’t go into force until 2025.
