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DMA: feared by online platforms, bringing hope for users

Soon, the online world will undergo a radical transformation. As of 1 November 2022, the Digital Markets Regulation entered into force, which will mainly affect large companies doing business in the digital world – such as Apple, Google, or Microsoft.

The main objective of the Digital Markets Act (“DMA”) is to set restrictions for large companies referred to as gatekeepers who provide services in the online world with the aim to reach end users (e.g., search engines, social networks, virtual assistants, cloud computing services or advertising services), thereby ensuring the protection of competition and of the users themselves. 

Companies will be considered gatekeepers if they meet any of the following criteria:

  • The company has sufficient market significance, i.e., an annual turnover of at least EUR 7.5 billion or a market value of at least EUR 75 billion.
  • The company connects a large number of businesses to a large number of consumers through its platform: the platform has at least 45 million users in the EU and at least 10,000 business users (e.g., Meta, Apple, or Microsoft).

Furthermore, gatekeepers will also be companies designated as such by the European Commission, even if they do not meet the above criteria.

The DMA introduces many new obligations and restrictions for gatekeepers, often ensuing from judicial decision-making practice in the field of competition law. Examples include:

  • prohibition to use the personal data of its users obtained within one service for another service of the same gatekeeper without the users’ consent
  • prohibition to use the personal data of its users obtained through third parties for the purpose of providing advertising without the users’ consent
  • prohibition to require users to register for a service to use the main service provided by the gatekeeper
  • prohibition to require users to use certain services (e.g., a payment service)
  • prohibition to prevent its users from notifying the competent public authority of non-compliance
  • obligation to allow businesses to promote their offers on the gatekeeper’s platform
  • obligation to inform the Commission of any contemplated merger with another digital service provider or a provider enabling data collection.

Each gatekeeper is obliged to notify the Commission of its gatekeeper status without delay; to ensure transparency, the Commission shall regularly publish their list and the services for which they must comply with the above obligations.

For breaches of these obligations, the Commission may impose a penalty of up to 10% of the gatekeeper's worldwide turnover in the previous accounting period, even for negligent breaches. A penalty of up to 20% of the global turnover can be imposed if the gatekeeper already committed a breach in the last eight years. The key provisions of the DMA will be entering into effect gradually in the course of 2023. In view of the need to thoroughly assess whether a company may have gatekeeper status and the large number of new restrictions associated with it, we recommend preparing for the DMA as soon as possible.