Agreement on rules to limit the power of Big Tech
The European Parliament and Council have agreed on new EU rules to limit the market power of big online platforms – the Digital Markets ACT (DMA). The new rules are expected to come into force this autumn.
The EU Commission said the rules are among the first initiatives of its kind to comprehensively regulate the gatekeeper power of the largest digital companies.
“Large gatekeeper platforms have prevented businesses and consumers from the benefits of competitive digital markets. The gatekeepers will now have to comply with a well-defined set of obligations and prohibitions. This regulation, together with strong competition law enforcement, will bring fairer conditions to consumers and businesses for many digital services across the EU”, said Commission executive vice president Margrethe Vestager in a statement.
Once adopted, the DMA Regulation will be directly applicable across the EU and will apply six months after entry into force.
The Commission proposed the DMA in December 2020 to address the negative behaviours by online platforms acting as digital “gatekeepers” to the EU single market.
The Commission will be able to impose penalties and fines of up to 10% of a company’s worldwide turnover, and that may, in the event of repeated infringements, reach up to 20% of such turnover.
The DMA also gives the Commission the power to carry out market investigations that will ensure that the obligations set out in the regulation are kept up-to-date in the constantly evolving reality of digital markets.
The Digital Markets Act together with the Digital Services Act are two rule systems meant to limit the power and dominance of the big tech companies. The Services Act is not included in the agreement now reached by negotiators for the European Parliament and Council.
Big tech companies have forcefully been arguing against some of the legislation as the Acts open up for more competition. The rules will be valid across the European Union but are of interest globally as an ambitious attempt to better regulate digital markets and the dominating players on these markets. The Acts are expected to have a global impact.
DIGITAL MARKETS ACT, a short summary:
- The Digital Markets Act(DMA) blacklists certain practices used by large platforms acting as “gatekeepers” and enables the EU Commission to carry out market investigations and sanction non-compliant behaviours.
- The purpose of the Digital Markets Act is to ensure a level playing field for all digital companies, regardless of their size. The regulation aims to lay down clear rules for big platforms – a list of “dos” and “don’ts” – to stop them from imposing unfair conditions on businesses and consumers.
- Putting an end to unfair business practices by big online platforms
- Restrictions on “killer acquisitions”
- Gives users the option to uninstall pre-installed software applications, such as apps, on a core platform service at any stage
- Whistleblowers should be able to alert competent authorities to actual or potential infringements. They should be protect them from retaliation
- The Commission can impose fines of “not less than 4% and not exceeding 20%” of its total worldwide turnover in the preceding financial year.
DIGITAL SERVICES ACT, a short summary
- Aims to create a safer online space for users, stricter rules for platforms
- The DSA establishes a “notice and action” mechanism, as well as safeguards, for the removal of illegal content.
- Online platforms must be transparent about how algorithms work and platforms should be accountable for decisions they make.
- Measures to counter illegal products, services and content online, including clearly defined procedures for removals
- Mandatory risk assessments and more transparency over “recommender systems” to fight harmful content and disinformation
- Online platforms should be prohibited from using deceiving or nudging techniques to influence users’ behaviour through “dark patterns”
- Targeted advertising: the text provides for more transparent and informed choice for all recipients of services, including information on how their data will be monetised and to better protect minors from direct marketing, profiling and behaviourally targeted advertising for commercial purposes
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