Steps are being taken within the European Union to curb the powers of some of the world's biggest online platforms – the so-called "gatekeepers" that just keep getting bigger and prevent smaller companies from providing alternative services.
The EU Digital Markets Act (DMA) was established to ensure that these platforms behave in a fair way online and is one of the centrepieces of the European digital strategy together with the Digital Services Act (DSA). Essentially, the DMA sets rules on what companies with gatekeeper status will be allowed to do and not to do in the EU.
A European Parliament committee, the Internal Market and Consumer Protection committee (IMCO), has now adopted its position on the DMA – which in EU-speak means the act has moved further along the procedural route that should see it adopted throughout the bloc. The DMA file is due to be voted on in plenary in December 2021.
The approved text of the act should ultimately become the Parliament's mandate for negotiations with EU governments, planned to start under the French presidency of the Council in the first semester of 2022.
The DSA – a parallel proposal to regulate online platforms, dealing with, among other issues, illegal content and algorithms – will be voted on by the committee at a future meeting.
Andreas Schwab, a German politician and Member of the European Parliament (MEP), made the EU's goals plain: "We do not want bigger companies getting bigger and bigger without getting any better and at the expense of consumers and the European economy. Today, it is clear that competition rules alone cannot address all the problems we are facing with tech giants and their ability to set the rules by engaging in unfair business practices. The Digital Markets Act will rule out these practices, sending a strong signal to all consumers and businesses in the Single Market: rules are set by the co-legislators, not private companies!"
To qualify as a gatekeeper, companies need to be providing "core platform services" including online intermediation services, social networks, search engines, operating systems, online advertising services, cloud computing, video-sharing services, as well as web browsers, virtual assistants and connected TV.
Quantitative thresholds are €8 billion (US$9 billion) in annual turnover in the European Economic Area (EEA) and a market capitalization of €80 billion ($89.7 billion). Companies would also need to provide a core platform service in at least three EU countries and have at least 45 million monthly end users, as well as more than 10,000 business users.
While no names were mentioned, the clear targets are the likes of Amazon, Apple, Facebook and Google.
The dos and don'ts
According to the DMA, gatekeepers will have to refrain from imposing unfair conditions on businesses and consumers and using targeted ads that make use of personal data, except if there is a "clear, explicit, renewed, informed consent," in line with the General Data Protection Regulation.
Furthermore, so-called "killer acquisitions" can also be restricted in order to prevent further damage to the internal market.
This particular guideline certainly chimes with recent comments by Timotheus Höttges, the CEO of Deutsche Telekom, who has called for deals where the big hyperscalers buy up small companies "which we are using to digitize our core infrastructure and the software-ization of our infrastructure service" to be restricted.
MEPs also proposed the creation of a "European High-Level Group of Digital Regulators" to facilitate cooperation and coordination between the European Commission and member states in their enforcement decisions.
In addition, IMCO members said the DMA should allow whistleblowers to alert competent authorities to actual or potential infringements of this regulation and to protect them from retaliation.
The proposal is that if a gatekeeper does not comply with the rules, the Commission can impose fines of "not less than 4% and not exceeding 20%" of its total worldwide turnover in the preceding financial year.
In October 2020, Cédric O, France's secretary of state for digital transition and electronic communications, joined forces with Mona Keijzer, state secretary for economic affairs and climate policy for the Netherlands, to sign a position paper calling on a "European regulator" to take action against emerging tech giants and existing gatekeeper platforms – including options to break them up.
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— Anne Morris, contributing editor, special to Light Reading