By Michaela Fuller

 

European policymakers reached an agreement this week on the terms of the Digital Markets Act—a piece of legislation that has been donned “one of the world’s most far-reaching laws to address the power of the biggest tech companies, potentially reshaping app stores, online advertising, e-commerce, messaging services and other everyday digital tools.”[1]

The Digital Markets Act (the “DMA”) imposes a strict set of restrictions on big tech companies that qualify as “gatekeepers” under goals of ensuring fairness and regulation in the digital marketplace.[2] Gatekeepers include companies that measure at least €7.5 billion in annual revenue and €75 billion in market capitalization and have at least forty-five million monthly users and 10,000 yearly business users.[3] Companies like Amazon, Google, Meta, Microsoft, and Apple will be affected.[4]

The DMA aims to “protect consumers and give rivals a better chance to survive against the world’s powerful tech juggernauts” with rules that will force gatekeeper companies to, among other things, offer its users alternative payment systems, search engines, and messaging platforms.[5] These regulations seek to increase the number of service options available for consumers to choose from while creating real opportunities for new innovators and start-ups to thoughtfully compete in the tech market.[6]

As far as the gatekeepers go, the European Commission notes the tech giants “will keep all opportunities to innovate and offer new services … [but] will simply not be allowed to use unfair practices towards the business users and customers that depend on them to gain an undue advantage.”[7] To hold the gatekeepers accountable, non-compliance with the DMA can result in fines reaching up to ten percent of the company’s worldwide revenue, and up to twenty percent for repeat offenders.[8]

What will these rules actually look like in practice? The DMA will grant users “the option to uninstall pre-installed software applications on a core platform service at any stage.”[9] This means that, for example, iPhone users will be able to delete Safari and Android users can remove Chrome from their devices without affecting the operating systems’ functionality. Apple and Google will also have to allow alternatives to their application stores and payment methods, and online advertising sellers “will see new limits for offering targeted ads without consent.”[10]

Perhaps most controversially, the DMA will also “force messenger services to ensure interoperability with other messaging services,” which will allow for seamless group chatting between users with different operating systems.[11] This means that messaging services like WhatsApp “could be required to offer a way for users of rival services like Signal or Telegram to send and receive messages to somebody using WhatsApp.”[12] Critics fear this interoperability requirement could lead to a huge divide in the market and even a potential collapse of service providers that may provide users with perks like better privacy practices, but cost more than other options.[13]

Messaging interoperability is not the only piece of the DMA that has received criticism, and many questions still remain as to the future of the law. Deemed “one of the fiercest lobbying efforts ever seen,” big tech companies have fought against the regulations at every step of the legislative process and are now “expected to look for ways to diminish [the DMA’s] impact through the courts.”[14]

The DMA will now seek final approval by a full session of the European Parliament and by ministers from the E.U.’s twenty-seven member states.[15] Once passed, the DMA will be “directly applicable across” the entire European Union.[16] Meanwhile, European regulators now face the task of enforcing the new law with the rest of the world watching the effects of his monumental step toward taming big tech.

 

[1] Adam Satariano, E.U. Takes Aim at Big Tech’s Power with Landmark Digital Act, N.Y. Times (Mar. 4, 2022), https://www.nytimes.com/2022/03/24/technology/eu-regulation-apple-meta-google.html.

[2] The Digital Markets Act: Ensuring Fair and Open Digital Markets, Eur. Comm’n, https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en [hereinafter The Digital Markets Act].

[3] European Union Reached a Political Agreement on the Digital Markets Act, Nat’l L. Rev. (Mar. 29, 2022), https://www.natlawreview.com/article/european-union-reached-political-agreement-digital-markets-act.

[4] Satariano, supra note 1.

[5] EU Negotiators Agree Landmark Law To Curb US Big Tech Giants, Al Jazeera (Mar. 25, 2022), https://www.aljazeera.com/news/2022/3/25/eu-negotiators-agree-landmark-law-to-curb-us-big-tech-giants [hereinafter EU Negotiators].

[6] The Digital Markets Act, supra note 2.

[7] Id.

[8] EU Negotiators, supra note 5.

[9] The Digital Markets Act: What You Need to Know About the EU’s New DMA, The Stack (Mar. 28, 2022), https://thestack.technology/the-digital-markets-act-what-you-need-to-know/ [hereinafter What You Need to Know].

[10] Satariano, supra note 1.

[11] What You Need to Know, supra note 9.

[12] Satariano, supra note 1.

[13] What You Need to Know, supra note 9.

[14] Satariano, supra note 1.

[15] EU Negotiators, supra note 5.

[16] The Digital Markets Act, supra note 2.

Image source: https://images.app.goo.gl/GnqHmD4X54nfJiwe6

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