On May 2, 2023, the Digital Markets Act (DMA)[1] entered into force. This European regulation aims to keep competition in the digital market fair and well-functioning by regulating so-called ''Gatekeepers.'' Gatekeepers are large digital platforms that provide so-called core platform services, such as online search engines or app stores, which hold significant market power. To prevent gatekeepers from thwarting competitors with their market power, the DMA imposes obligations and prohibitions on them.
The DMA is part of the EU's legislative package on digital services and touches on various competition and privacy issues. Along with the Digital Services Act (DSA), the first draft was announced in 2021. Together with the DSA, AVG and the AI Act, the DMA should contribute to fair(er) competition in digital markets.
In this blog, we set out for you the rules governing gatekeepers, and how (smaller) market participants can use the DMA to counter unfair competition by gatekeepers in digital markets.
Gatekeepers within the meaning of the DMA are companies that offer core platform services and meet three criteria:
The company's size affects the internal market.
The company controls a key gateway for business users to end users.
The company has a resistant and sustainable position.
The DMA also prescribes a list of core platform services, including online brokering services, online search engines, online social networking services and web browsers. If the above criteria are met, then the European Commission can formally designate the company as a gatekeeper, and the company must comply with the DMA's obligations.
Currently, seven companies with a total of 24 services have been designated as gatekeepers under the DMA by the European Commission. They are Alphabet (including Google Search, YouTube), Amazon, Apple (including Appstore), Booking (Booking.com), ByteDance (TikTok), Meta (including Facebook, Whatsapp) and Microsoft (including Windows, LinkedIn)[2].
The DMA contains a comprehensive list of gatekeeper practices that are considered unfair, and prescribes various obligations to gatekeepers. Gatekeepers are required to comply with these obligations within six months of the designation decision. For the initial six gatekeepers, the six-month deadline expired on March 6, 2024. Booking was later designated as a gatekeeper, and still has until Nov. 13, 2024, to become DMA-compliant.
Some examples of gatekeeper obligations include:
Enabling third parties to cooperate with the gatekeeper's own services in certain specific situations;
Provide business users with access to data on the knowledge platform that these users generate themselves;
Giving advertisers and publishers who use their platform the tools and information necessary to analyze ads themselves on the gatekeeper's platform;
Enable business users to promote their offerings on the platform and enter into contracts with customers outside the platform.
Examples of behaviors from which gatekeepers should refrain are:
Rank own services and products on the platform higher or more favorably than comparable third-party products or services;
Banning consumers from contacting companies outside the platform;
Prevent users from uninstalling automatically installed software or apps;
Tracking end users outside the gatekeeper core platform service for the purpose of targeted advertising without effective consent.
The DMA also affects how gatekeepers process personal data. The DMA includes a number of obligations for gatekeepers aimed at protecting users' privacy. These obligations ensure that gatekeepers do not abuse their (dominant) position by combining data of users collected in different services for commercial purposes. These are the following obligations
The gatekeeper may not process personal data of end users using third-party services through core platform services for the purpose of offering online advertising services;
Personal data from the core platform service may not be combined with personal data from other core platform services, other gatekeeper services, or third-party services;
Personal data from the core platform service may not be used in other separate gatekeeper services, including other core platform services, and vice versa;
End users should not be automatically logged into other gatekeeper services for the purpose of combining personal data.
The European Commission has the authority to investigate gatekeepers' compliance with the DMA. It has now launched several such investigations. For example, Apple is the subject of three different non-compliance investigations. As part of one of these investigations, the European Commission published preliminary findings on June 24, 2024, stating that Apple's steering rules used in the Apple App Store violate the DMA. Apple currently uses three types of business terms in the App Store that do not allow app developers to freely redirect their customers to alternative and/or cheaper distribution channels. For example, developers cannot provide pricing information within the app or otherwise communicate with their customers to promote offers available on alternative distribution channels. This, in the European Commission's preliminary view, constitutes a violation of the DMA. Apple now has the opportunity to defend itself before the Commission will make final decisions regarding any non-compliance and potential penalties."[3]
If the European Commission's investigation reveals that a gatekeeper is not complying with the rules in the DMA, the European Commission may impose penalties. The European Commission can impose fines on the platform of up to 10% of its total annual worldwide turnover or up to 20% in case of repeated violations. The European Commission may also decide to impose a periodic financial penalty of up to 5% of the average daily turnover. Finally, in case of systematic violations of the DMA, additional measures may also be imposed, which may go as far as an order to change the conduct or structure of the platform concerned.
In principle, compliance with the DMA is enforced by the European Commission. However, there are several tools for market participants who are troubled by gatekeeper behavior to initiate or encourage enforcement and/or compliance. First, this can be done by complaining to national competition authorities, such as the Authority Consumer and Market (ACM) in the Netherlands. These competition authorities are designated as national regulators and have powers to initiate investigations into gatekeeper designation of companies, or the conduct of already designated gatekeepers. In addition, competitors or other aggrieved parties can also go directly to court to enforce compliance with the DMA, or seek damages after a violation of the DMA has been established. One way to do this is in mass tort claims.
Are you experiencing obstacles due to the dominant position of gatekeepers? Are your interests as a competitor and/or consumer harmed by their actions? We are happy to think with you about ways to counter unfair practices by gatekeepers, and to recover any damages.
[1] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector, and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Regulation) (OJEU 2022, L 265/1).
[2] For an up-to-date list of designated gatekeepers, see the European Commission's website ''Gatekeepers.'' [https://digital-markets-act.ec.europa.eu/gatekeepers_en].
[3] Read more at European Commission, Press Release: Commission sends Apple its preliminary findings and opens additional investigation for Apple's non-compliance with Digital Markets Regulation, June 24, 2024 [https://ec.europa.eu/commission/presscorner/detail/nl/ip_24_3433].
