The unfair competition and the creation of monopolies These are two objectives pursued by the European Parliament. It is in this context that the Digital Markets Act adopted on July 5, the impact of which will be felt most significantly by the tech industry giants, while providing some relief to small and medium-sized businesses, startups, and consumers themselves.
In this post, we're going to discuss the most critical aspects of the Digital Markets Act to get all the information on a key regulation at the European level.
What is the Digital Markets Act (DMA)?
The gatekeepers They are also known as the gatekeepers of the digital sector. The Digital Markets Act aims to prevent the use and enjoyment of their services from being imposed on both end users and businesses.
The EU Digital Markets Act It seeks to ensure a digital services market that is free of barriers and accessible to all. To this end, its goal is to prevent practices that jeopardize free competition or restrict the rights of end users.
To this end, a legal framework will be established with common rules to facilitate competitiveness and growth and to foster innovation. It will also facilitate market access for smaller platforms and small and medium-sized enterprises and ensure an environment that enables growth and consolidation of startups.
Consequently, the Digital Markets Act aims to ensure that the same rules apply to both large tech companies and smaller platforms in order to prevent the imposition of unequal rules of the game.
Who is affected by the Digital Markets Act?
The gatekeepers or access guardians will be the most affected by the Digital Markets Act, provided that they are classified as such under their own regulations.
The procedure for designating the platform as a gatekeeper is the responsibility of the platform itself, which must notify the European Commission this status, and that the Commission itself grant this status in accordance with the criteria set forth in the regulation.
The Gatekeepers of the Digital Markets Act
The requirements set forth by the Digital Markets Act The criteria for qualifying as gatekeepers are as follows:
- The the company's revenue must have had revenue of at least 7.5 billion euros over the past three fiscal years and must provide its basic platform services in at least three member states.
- The gate control with a large number of professional users and end users. Specifically, 45 million or more active monthly end users in the EU and 10,000 or more active annual professional users in the EU during the last fiscal year.
- The company is well-established in the market. This means that the user segments described above have remained constant over the past three fiscal years.
However, these are not the only requirements established by European regulations; they must also provide one or more of the so-called “basic platform services” as provided by law:
- Search engines
- Online Brokerage Services
- Video-sharing platforms
- Social Media
- Operating Systems
- Number-independent interpersonal communication services
- Web Browsers
- Virtual Assistants
- Online Advertising Services
- Cloud Services
Following this line of reasoning, companies such as Apple, Meta, Google, and Amazon will be considered gatekeepers and, as a result, will be required to comply with the Digital Markets Act.
How will the Digital Markets Act be implemented?
When applying the Digital Markets Act, a three-step process must be followed:
- Companies must verify, on their own, that they comply with the requirements established for gatekeepers. If compliance is confirmed, the European Commission must be notified within 2 months.
- The Commission will review the documents submitted and appoint an access guardian for the company within 45 days.
- Classified as access gatekeepers, companies must comply with the obligations and prohibitions set forth in the law within six months.
However, the Commission may provide well-founded grounds for rejecting the request, such as access guards. Here, the Commission will review the documentation and conduct a market investigation within three months. Once this process is complete, it will first issue preliminary conclusions and, two months later, announce its decision on whether or not to designate the company as a gatekeeper.
Penalties for Noncompliance with the DMA
Violations of the Digital Markets Act are defined as cases in which access gatekeepers fail to comply with their obligations. Thus, the sanctions will be as follows:
- Fines of up to 10% of the platform's annual global revenue
- Fines of up to 20% of annual revenue in the event of repeated noncompliance.
- Periodic penalty fines of up to 5% of total daily revenue.
In addition to these fines, other measures may be imposed, such as the sale of assets or a ban on acquiring other companies engaged in digital services or related to intellectual property or trademark law.
When does the Digital Markets Act take effect?
The Digital Markets Act It will take effect approximately 20 days after it is published in the Official Journal of the European Union, likely in October or November 2023.
However, its actual implementation will not take place until six months later, in March or April 2023. Since this is a regulation, it will apply directly in all European Union member states without the need for further adaptation. Therefore, in Spain, the Digital Markets Act will take effect simultaneously with the rest of the EU countries.
