The world’s largest tech companies are gearing up for tight rules on how they run their businesses in the European Union.
The bloc’s Digital Markets Act (DMA) will compel Big Tech firms to make it easier and cheaper for companies to compete on their platforms from March — or else face serious fines.
As part of the path to enforcing the DMA, the European Commission will on Wednesday identify a handful of digital “gatekeepers” — companies already supreme in their marketplace — that must comply with the DMA’s strict rules aimed at stifling anticompetitive behavior and stopping abuse of dominance.
Among the restrictions designated gatekeepers will face are having to provide free updates to companies that buy or sell ads on their platforms, and stopping social media networks from requiring a specific type of account to access their apps and services.
Here are five things to know about the EU’s sweeping new rulebook that’s set to upend how people use their favorite platforms.
1. The DMA will reverberate beyond the EU
The Commission’s drive to create a more competitive tech landscape for consumers and businesses will be felt around the world — not just in Europe. The EU’s Internal Market Commissioner Thierry Breton told a Digital Summit in Tallinn on Tuesday that the EU’s policymakers were aware that their attempts to regulate Big Tech were “being closely watched across the globe.”
Over the years, Brussels’ antitrust enforcers have struggled to rein in the market dominance of companies like Microsoft and Google using existing rules. The DMA marks a new, robust attempt to foster fair play online. “It was high time that Europe sets its rules of the game upfront,” Breton said, instead of using “lengthy and not always effective antitrust investigations.”
The DMA is a way to “address problems that have been subject to discussion for a very long time,” Damien Geradin, founding partner of law firm Geradin Partners, told POLITICO. “If you look at the obligations, many of them are actually quite significant.” Geradin’s firm represents smaller tech companies battling larger ones, such as Apple.
Thanks to the size of the European market, major tech companies will have difficulty avoiding the new rulebook — and their compliance is likely to have global ripple effects. Some countries — like the United Kingdom — have started drafting their own rulebooks. Others will watch the EU carefully in the coming months and years to see how successfully the DMA plays out — and what they can borrow from it for themselves.
2. Gatekeepers are the key
The DMA targets companies that have a monopoly in the digital economy. A clutch of such firms — including social media networks, search engines, web browsers, online marketplaces, video-sharing apps and messaging services — will soon be designated as gatekeepers, putting them in the rulebook’s crosshairs.
Gatekeepers should have at least 45 million active monthly users and 100,000 yearly business users in the EU, and a turnover of at least €7.5 billion in the last three financial years or a market capitalization above €75 billion. The Commission can also designate platforms that don’t necessarily meet those criteria in order to capture those with an “entrenched and durable position” in their markets.
Apple and Google were among the seven companies that self-declared as gatekeepers in July. Platforms like Google Search, Microsoft’s operating systems, Apple’s App Store and Meta’s Instagram will all be expected to adjust their practices to comply with the DMA’s new rules.
Breton has said he would reveal the names of the gatekeepers and the platforms being targeted through his account on X (formerly Twitter).
3. The clock is ticking
The DMA will stop designated gatekeepers from forcing people to use only their platforms and products. It also makes it more difficult for big tech companies to gather personal data for advertising by tracking users online.
From Wednesday, gatekeepers have until March 2024 to comply with the rules, but “we may see some of the obligations implemented before the deadline,” Geradin said, if they “have good reasons to do so,” such as an ongoing EU antitrust probe.
Gatekeepers will have to let users give explicit consent in order for their online behavior to be tracked for advertising purposes. Platforms must also let their business users have access to collected user data.
Interoperability is also a major part of DMA compliance. Users of Meta-owned WhatsApp, for example, may be able to send messages directly to a different platform, such as Signal.
Alternative app stores must be allowed to operate on devices like mobile phones, and gatekeepers can’t favor their own services over others on their platforms. Users would have the option to uninstall apps that came automatically loaded onto their devices. The Commission will also have stronger oversight over gatekeepers’ future mergers.
Big Tech lawyers began meeting with DG COMP officials in December workshops to iron out the finer details of compliance and how the new rules will be implemented. Once gatekeepers are designated, they have six months to change their business practices to align with the rulebook.
“We have already started discussing compliance with companies, who have understood that the rules of the game have changed,” Breton said in a statement Tuesday.
4. Play nice or pay up
The Commission can start challenging offending platforms from March 2024, after the six-month adjustment period for compliance ends. If they don’t comply “they will face heavy sanctions,” Breton said.
Gatekeepers who fail to comply with the rules face fines of up to 10 percent of their total annual worldwide turnover — which could rise to up to 20 percent for repeat offenders.
In more extreme cases of noncompliance, the Commission could force companies to break up or ban them from buying up smaller competitors.
That said, enforcing the rules will not be easy: “They’re all very tough companies,” Geradin said, adding that he thinks Apple is “the toughest nut to crack.”
5. Expect Big Tech backlash
“Apple and Google will have to cave in to a great extent,” under the EU’s new rules, lawyer Geradin said. “Will they be willing to do that? Well, that’s a different matter.”
Unsurprisingly, tech giants aren’t too happy about their new obligations.
How they’re voicing their displeasure varies. Some have unleashed the lawyers and are preparing to challenge some of the Commission’s designations. Meta has claimed that the delayed EU rollout of its new Threads app — designed to compete with Elon Musk’s X, formerly known as Twitter — was thanks to concerns about DMA compliance. Amazon already challenged the Commission in July over its designation as a very large online platform under the EU’s new rules on harmful content, the Digital Services Act, and is temporarily off the hook.
While it is possible for gatekeepers to challenge their designation, the Commission has said this could happen only in “exceptional” circumstances. Some companies are preparing to fight EU policymakers on their designations, and could even challenge the DMA as a whole.
“Most experts believe that there will be litigation,” Geradin said.