From this Tuesday, May 2, large digital companies must now comply with new measures on European territory.
This Tuesday, May 2 marks the official implementation of the Digital Markets Act (DMA), says Digital Marketplace Regulations on the territory of the European Union. From now on, the law is in a period of “transition”, where the various actors will have to work together to carry out the final implementation of this new legislation.
· What is the Digital Markets Act?
The Digital Markets Act, or DMA, aims to regulate large digital companies and their economic activities in the European Union. More specifically, its objective is to limit the dominant economic position of the majority of digital platforms on European territory, curb their anti-competitive practices – and the resulting dependence – and better protect users and consumers. It was voted by the European Parliament on July 5, 2022 and finalized the following November.
The DMA goes hand in hand with the Digital Services Act (DSA), which aims to regulate the relationship between platforms and their users, and should come into force at the end of August 2023.
· How will the implementation take place?
From this Tuesday, May 2 and until March 2024, companies must work to comply with all the requirements of the Digital Markets Act. Sanctions will be applied from this deadline if this is not the case.
· Who is affected by the text?
The companies targeted are logically the GAFAM (Google, Apple, Facebook, Amazon and Microsoft), as well as a handful of others, operating in at least three Member States of the Union. There are, among others, the Chinese companies AliBaba and AliExpress, the German seller Zalando, the travel service Booking or the social networks TikTok, Snapchat and Twitter.
The official text lists the services concerned: intermediation services (such as marketplaces, application stores), search engines, social networks, video-sharing platforms, online messaging systems, exploitation (including connected televisions), online data storage services, advertising services (such as networks or advertising exchanges), web browsers, and finally virtual assistants.
· What criteria define them?
To target them, the legislators now impose the name of “access controller” on them. Companies that can be classified as such meet several criteria, defined as such in article 2 of chapter III of the official text:
“(If) it has a significant weight in the internal market, (if) it provides an essential platform service which constitutes a major access point for business users to reach their end users; and (if) it enjoys a solid and durable position in its activities, or will, in all likelihood, enjoy such a position in the near future.”
The criteria of turnover and the number of users come to refine the contours of this law. Thus, a company is an “access controller” “(if) it has achieved an annual turnover in the Union greater than or equal to EUR 7.5 billion in each of the last three financial years, or if its average market capitalization or equivalent fair market value has reached at least 75 billion euros in the last financial year”.
In addition, it is concerned “if it provides an essential platform service which, during the last financial year, had at least 45 million active end users per month established or located in the Union”.
· What are their new obligations and prohibitions?
A platform designated as an “access controller” will now have to comply with a number of prohibitions and obligations. For the consumer, three strong points emerge:
– user consent will now be mandatory for the cross-referencing of data (from several services) for the purpose of advertising profiling;
– the end of pre-installed software on electronic devices and the facilitation of the use of alternative products, such as the possible use of alternative payment systems to Apple’s App Store and Google’s Play Store (two measures that are already in place)
– and finally, the interoperability of messaging services, which will allow, very concretely, a WhatsApp user to chat with a Signal user.
· What are the risks for non-compliant companies?
The text first requires a financial penalty of up to 10% of the company’s annual turnover (i.e., for example, $36 billion for Apple, which achieves $365 billion in turnover in 2021), then 20% in case of recidivism.
In the event of serious and repeated infringements, the Commission will open a market investigation or may impose a ban on practicing in the territory.
