EU Digital Markets Act comes into force: what is it and what does it mean for big tech?

EU Digital Markets Act comes into force: what is it and what does it mean for big tech?

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Landmark rules aimed at curbing the dominance of tech giants have come into force in the European Union, leading to major changes in the digital landscape.

The Digital Markets Act (DMA), which came into force on Tuesday, November 1, aims to end unfair practices by companies that act as digital “gatekeepers”.

The EU hopes this will help start-ups innovate and compete with Big Tech, and give consumers more choice.

It is seen as a change in philosophy in the bloc’s fight against the dominance of big platforms such as Google, Amazon, Apple, Meta and Microsoft, and comes after years of unsuccessfully chasing down multinational corporations’ infringements in endless legal proceedings.

The DMA lays out a list of do’s and don’ts that companies identified as digital guardians will need to implement.

For example, under the new rulesmajor platforms are prohibited from ranking their own products or services more favorably over those of third parties, as Google has been accused of doing with its Google Shopping e-commerce site.

Gatekeepers cannot track consumer activity across the web for targeted advertising purposes without their express consent.

The rules also prevent the imposition of pre-installed software on computers or phones, such as browsers or music apps.

Instead, gatekeepers will have to allow users to do things like download the App Store of their choice to their mobile phone, and give them the option to install a default search engine web browser or voice assistant of their choice.

In another key change, gatekeepers will also have to follow interoperability rules that will allow, for example, smaller messaging services to require gatekeepers to let their users send and receive messages through the larger platform.

In addition, gatekeepers will need to provide business users with access to data generated by their activities on the gatekeeper’s platform.

The new rules will also prevent these giants from using data generated on their site by business customers to better compete with them, as Amazon has been accused of doing.

Which companies will be affected?

The law does not appoint specific guardians, but the European Commission aims to decide which companies fall under this designation by September 6, 2023.

It says gatekeepers will be companies that meet certain criteria regarding number of users, financial size, and where they operate, as well as whether they have a “well-entrenched and enduring position.”

These guardians will then have six months to comply.

The DMA is now entering a six-month implementation phase and will begin to apply on May 2, 2023.

Custodians who break the new rules could face fines of up to 10% of the company’s global revenue, and up to 20% for repeat offences.

If a gatekeeper consistently breaks the rules, the European Commission says it will also be able to impose “behavioral or structural remedies necessary to ensure the effectiveness of the obligations, including a ban on new acquisitions”.

DMA will “profoundly” change the digital landscape

“DMA will profoundly change the digital landscape,” said European antitrust chief Margrethe Vestager, who originally proposed the legislation.

“A small number of large companies hold significant market power in their hands,” she said in a statement. “Gatekeepers with an entrenched position in digital markets will need to show that they compete fairly.”

“We invite all potential gatekeepers, their competitors or consumer organizations to come and discuss with us the best way to implement DMA.”

Before the DMA came into force, tech giants had expressed concern about the legislation, which they said could impact innovation.

Google has previously said that “while we support many of the DMA’s ambitions for consumer choice and interoperability, we remain concerned about the potential risks to innovation and the variety of choices available to Europeans.”

Apple also said it was “concerned” about “certain provisions [which] will create unnecessary privacy and security vulnerabilities for our users, while others will prohibit us from charging for the intellectual property in which we invest heavily.”

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