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EU’s latest Digital Markets Act: all you need to know

Digital Markets Act asks the gatekeepers providing messenger services to allow interoperability of their instant messaging services.

EU Digital Markets Act

In another move to control the online world, European Union (EU) has introduced a new regulation. The EU’s Digital Markets Act (DMA) came into force on November 1. The DMA is part of the European regulatory program- ‘A Europe Fit For the Digital Age’. It is designed to regulate the digital space and end the unfair practices of the tech giant or what it calls the “gatekeepers”. The legislation is aimed at making big tech companies including Amazon, Google, and Meta make their platforms more open and interoperable in 2023, along with ensuring open markets.

The regulatory program, which also includes other legislative proposals like the Artificial Intelligence Act and the Data Governance Act, is expected to significantly impact the digital regulatory landscape in EU countries in the coming years. The DMA was proposed by the Commission in December 2020 and agreed upon by the European Parliament and the Council in March 2022. The legislation will apply on 2 May 2023 following a six-month transition period. That means the tech platforms don’t have to comply immediately. During this six-month period, the EU first must decide which companies are large and entrenched enough to be classified as “gatekeepers” subject to the toughest rules. Gatekeeper obligations will then apply to start in March 2024.

DMA lays out a framework to protect consumers and end unfair practices by tech giants that act as Gatekeepers in the digital space. “Gatekeepers” are those platforms that have a market capitalization of at least €75 billion or an annual turnover of €7.5 billion. Companies must also have at least 45 million monthly end users in the EU and more than 10,000 annual business users. Companies will be asked to verify if they meet the quantitative thresholds

For example, under the DMA, the tech companies like Apple and Google must allow users to uninstall pre-installed software and allow for the installation of third-party apps. It will also ban app stores to require app developers to use its payment processing to be listed on app stores. The legislation will also ensure that gatekeepers apply fair and non-discriminatory service while ranking goods and services on their search engines and platforms. Not only this, gatekeepers will be banned from using data from their platform business to compete on their own forum. Like, Amazon,  cant use sales data to develop its own label products, and nor could it rank them more favorably by default.

The rules also say that the tech companies will be prohibited from combining personal data from end-users collected through their core platform with data acquired from other services offered by them or third parties unless the user has given specific consent. The tech platforms will be subjected to the threat of fines of up to 10% of global annual turnover should they breach requirements or even 20% for repeat violations.

Another key provision of the Digital Markets Act asks the gatekeepers providing messenger services to allow interoperability of their instant messaging services by offering third parties to interoperate with their own services. Under this, the smaller platforms will be able to request that gatekeeper messaging platforms like WhatsApp, enable their users to exchange messages and send voice messages or files across messaging apps, as already available for email

The gatekeeper will have to comply with any reasonable request for interoperability within three months of receiving that request by rendering the requested basic functionalities operational.  However, messenger services benefit from transitional arrangements, which delay the application of the
DMA to these services by at least 2 two years.

The DMA is expected to lead to changes in how tech platforms serve people beyond the EU’s 400 million internet users because some details of compliance will be more easily implemented globally.

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