Member Article

The EU’s Digital Markets Act (DMA) [1] entered into force on 1 November 2022. A business that considers the platform it uses will likely be designated as a ‘gatekeeper’ and that the platform’s rules/behaviour are unfair can take certain steps now [2].

Q1 2023 to Q2 2023 - Engage with the platform to change its rules/behaviour.

Q2 2023 onwards – If the platform does not make changes, then the business may be able to engage with the EU regulator to bring to its notice the unfair practice/condition set by the platform.

Given Brexit why is the EU’s DMA relevant to UK businesses?

In addition to its direct applicability if you are doing business in the EU, the DMA is relevant in two other ways to UK businesses.  First, a UK business may be able to use the benchmark of the DMA’s rules to seek to improve the terms of doing business with a platform that is not subject to the DMA, using negotiation and, if that does not work, complaints under UK competition rules to the UK competition authority or courts.

Second, UK legislation [3] is foreseen that would provide powers to the UK’s competition authority that creates a regime like the DMA [4].  Familiarity with the DMA will help firms that do business with platforms that can be said to have a ‘substantial, entrenched market power in at least one digital activity, providing the firm with a strategic position’, which is the test the UK government is likely to include in foreseen legislation.

Some key questions for (UK) business users of gatekeeper platforms?

The following are some questions that business users may face and which the DMA (or UK equivalent) may be able or will resolve.

• Do you want to create/install your own independent app store on Android, iOS etc?
• Do you want to have interoperability of end-to-end text messaging between two individual end users (e.g., Android user to iMessage, similar to SMS interoperability)?
• As a publisher or advertiser do you want to know the method by which prices for advertisers and remunerations for publishers are calculated for online services (e.g., a price per impression, per view or any other criterion)?
• As an advertiser or its representative (i.e., advertising agent) would you want free of charge access to the gatekeepers’ performance measuring tools and the data (aggregated/non-aggregated data)?
• If you are competing with a gatekeepers’ core platform service, are its end-users able easily to unsubscribe from the platform’s service or uninstall pre-installed platform services?
• If you develop software applications, is the gatekeeper platform preventing end-users from choosing between your application and others, through its default settings/pre-installation?
• Do you want to change the fact that your end-users are compelled to use the gatekeeper’s payment system for in-app purchases?

Generally what platform ‘rules’ might be unfair?

The new rules establish obligations for gatekeepers, do’s and don’ts they must comply with in their daily operations.

Examples of the do’s - Gatekeeper platforms will have to:

• allow third parties to inter-operate with the gatekeeper’s own services in certain specific situations
• allow their business users to access the data that they generate in their use of the gatekeeper’s platform
• provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper
• allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform

Example of the don’ts - Gatekeeper platforms may no longer:

• treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper's platform
• prevent consumers from linking up to businesses outside their platforms
• prevent users from un-installing any pre-installed software or app if they wish so
• track end users outside of the gatekeepers' core platform service for the purpose of targeted advertising, without effective consent having been granted

Who is a gatekeeper?

A ‘gatekeeper’ is a business that

1. has a significant impact on the EU’s internal market (this will be presumed where the entity has annual EU turnover of at least EUR 7.5 billion, or its market capitalisation value is at least EUR 75 billion and it provides the same core platform service in at least three EU Member States),
2. provides a core platform service which is an important gateway for business users to reach end users (this will be presumed where the entity has at least 45 million monthly active end users in the EU and at least 10 000 yearly active business users established in the EU), and
3. enjoys an entrenched and durable position, in its operations, or it is foreseeable that it will enjoy such a position in the near future (this will be presumed if the test in (b) above is met in each of the last three financial years).

What is a core platform service?

A ‘core platform service’ is any of the following:

• online intermediation services (e.g., eBay, Airbnb),
• online search engines (e.g., Google, Bing)
• online social networking services (e.g., Facebook, Twitter),
• video-sharing platform services (e.g., YouTube, Vimeo),
• number-independent interpersonal communications services (e.g., WhatsApp, Telegram).
• operating systems (e.g., macOS, Microsoft Windows, Android),
• web browsers (e.g., Google, Mozilla Firefox),
• virtual assistants (e.g., Amazon Alexa, Apple’s Siri),
• cloud computing services (e.g., Google Cloud, AWS) and
• online advertising services, including any advertising networks (e.g., Google AdSense), advertising exchanges (e.g., AppNexus, OpenX, Google Ad Exchange) and any other advertising intermediation services (e.g., Adform, Sizmek, Google’s Campaign Manager), provided by a business that provides any of the core platform services listed above

Dynamic regulation

The DMA has a ‘list’ of do’s and don’ts but the regulator has the power to add other aspects of a platform’s business that can be determined to hinder contestable and fair markets.  Consequently, business users should bring their concerns to the attention of the regulator even if currently the DMA does not seem to address the ‘unfair’ practice/behaviour. 

 

 

References

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 Act).
2. Following the designation decisions (Q2/Q3 2023 – the EU is expected to make the first gatekeeper decisions during this period), gatekeepers will have six months to comply with the requirements in the DMA (Q1 2024).
3. UK HM Treasury, Autumn Statement 2022 HTML, 17 November 2022, https://www.gov.uk/government/publications/autumn-statement-2022-documents/autumn-statement-2022-html
4. The Competition and Markets Authority has delivered the advice of its Digital Markets Taskforce to government on the potential design and implementation of pro-competitive measures for unlocking competition in digital markets, 8 December 2022 https://assets.publishing.service.gov.uk/media/5fce7567e90e07562f98286c/Digital_Taskforce_-_Advice.pdf

 

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