Open and competitive digital market in Europe: urgent necessity

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During last four years the EU’s institutions, mainly the Commission, have been elaborating effective measures to manage the digital challenge in the member states. Two vital legislative acts have been adopted and enforced recently involving both the digital market and the services:  a) concerning the EU-wide digital services’ facilities, and b) optimizing the functioning of the European digital market through the six “gatekeepers”.

Digital Market Act, DMA  

The EU-wide digital market act, DMA (in force since November 2022 and applied since May 2023) aims to ensure contestable and fair markets in the digital sector: i.e. it regulates gatekeepers, which are large digital platforms that provide an important gateway between business users and consumers, whose position can grant them the power to create a bottleneck in the digital economy.

The DMA establishes a set of clearly defined objective criteria to identify “gatekeepers”; the latter are large digital platforms providing the so-called core platform services: e.g. online search engines, app stores, messenger services, etc. The gatekeepers will have to comply with all the obligations and prohibitions listed in the DMA.

The main EU legislative texts for the DMA are: a) Regulation 2022/1925*) from 14 September 2022 on contestable and fair markets in the digital sector, and b) the Implementing Regulation+).

Source: *) Official Journal of the European Union. L-265, Volume 65, 12 October 2022, pp. 1-66. In: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.265.01.0001.01.ENG&toc=OJ%3AL%3A2022%3A265%3ATOC

The European Commission’s implementing regulation (2023-824) details procedural aspects related to the DMA’s implementation and enforcement, e.g. the right for parties to be heard and to access the files, including the notification form which potential gatekeepers have to use when providing certain figures to the Commission in the designation process. The regulation’s aim is to ensure effective proceedings, as well as to provide legal certainty on procedural rights and obligations to the companies concerned, including those who will be designated as gatekeepers.

Source: +) The implementation regulation’s text in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2023.102.01.0006.01.ENG&toc=OJ%3AL%3A2023%3A102%3ATOC

The DMA is one of the first regulatory tools to comprehensively regulate the gatekeeper’s power of the largest digital companies. The DMA complements, but does not change EU competition rules, which continue to apply fully.

The six gatekeepers designated by the Commission in September 2023 (i.e. Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft) had to fully comply with all DMA obligations by 7 March 2024. The Commission has assessed the compliance reports setting out gatekeepers’ compliance measures, and gathered feedback from stakeholders, including in the context of workshops.

Pursuant to Article 20 DMA in conjunction with Articles 13 and 29 DMA for breach of Articles 5(2), 5(4), 6(3) and 6(5) DMA, respectively the Commission opened formal non-compliance proceedings (on 25.03.2024) against three of the gatekeepers -Alphabet, Apple and Meta. The Commission has also established gatekeeper status with respect to the specific core platform services.

Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4328.

In total, 22 core platform services provided by gatekeepers have been designated; the six gatekeepers will now have six months to ensure full compliance with the DMA obligations for each of their designated core platform services. The Commission is monitoring the effective implementation of and compliance with the DMA’s obligations.

In case a gatekeeper does not comply with the obligations laid down by the DMA, the Commission can impose fines up to 10% of the company’s total worldwide turnover, which can go up to 20% in case of repeated infringement. In case of systematic infringements, the Commission is also empowered to adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.

Digital Service Act, DSA

Following the political agreement reached by the EU co-legislators in April 2022, the DSA entered into force on 16 November 2022. The DSA regulates online intermediaries and platforms in such spheres as marketplaces, social networks, content-sharing platforms, app stores, as well as online travel and accommodation platforms.

However, its main goal is to prevent illegal and harmful activities online and the spread of disinformation. It ensures user safety, protects fundamental rights, and creates a fair and open online platform environment.

Besides, the DSA protects consumers and their fundamental rights online by setting clear and proportionate rules; it fosters innovation, growth and competitiveness, and facilitates the scaling up of smaller platforms, SMEs and start-ups.

The roles of users, platforms, and public authorities are rebalanced according to European values, placing citizens at the centre.

More on DSA in: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/digital-services-act_en

Also, on DSA Regulation 2022/2065 in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.277.01.0001.01.ENG&toc=OJ%3AL%3A2022%3A277%3ATOC

The DSA applies to all digital services that connect consumers to goods, services, or content. It creates comprehensive new obligations for online platforms to reduce harms and counter risks online, introduces strong protections for users’ rights online, and places digital platforms under a unique new transparency and accountability framework. Designed as a single, uniform set of rules for the EU, these rules will give users new protections and businesses legal certainty across the whole single market. The DSA is a first-of-a-kind regulatory toolbox globally and sets an international benchmark for a regulatory approach to online intermediaries.

Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_22_6906

The DSA includes rules for online intermediary services, which millions of Europeans use every day. The obligations of different online players match their role, size and impact in the online ecosystem. All four main online intermediaries, which are presently offering their services in the single market, whether they are established in the EU or outside, have to comply with the new rules.

Micro and small companies will have obligations proportionate to their ability and size while ensuring they remain accountable. In addition, even if micro and small companies grow significantly, they would benefit from a targeted exemption from a set of obligations during a transitional 12-month period.

By mid-February 2024, all platforms, with the exception of small and micro-enterprises, will have to comply with the general obligations introduced by the DSA: i.e. the DSA rules will apply to all platforms already in February 2024.

The supervision and enforcement of the DSA is being shared between the Commission and the EU-wide Digital Services Coordinators; the supervision authorities were designated by the EU institutions and the member states in February 2024.

More information in the following Commission’s web-links: = EU Official Journal text; = Digital Markets Act Q&A; = Digital Markets Act fact page; and = About gatekeepers.

 

 

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