What does the Digital Markets Act regulate?

What does the Digital Markets Act regulate?

What is the Digital Markets Act?

The Digital Markets Act (DMA) is a law created with the aim of regulating online markets and ensuring fair competition between companies in the Internet sphere.

The legal basis for the development of the Digital Markets Act is Article 114 of the Treaty on the Functioning of the European Union (TFEU) which guarantees the functioning of the single market, as well as Articles 101 and 102 of the TFEU relating to competition law which will continue to apply compatibly with the Digital Markets Act.

Its entry into force

This Law was published in the Official Gazette on October 12, 2022, entered into force on November 1, 2022 and will start to be applicable 6 months after its entry into force, i.e. on May 2, 2023. September 6, 2023 has been set as the deadline for the appointment by the Commission of the gatekeepers, and it will not be until 6 months later, March 2024, when it is estimated that all the obligations contained in the law will finally be applicable.

What types of Basic Services are covered by the Law on Digital Markets?

The Digital Markets Act covers the following services provided by platforms:

• Online intermediary services
• Online search engines;
•  Online social networking services;
• Video sharing platform services;
• Number-independent interpersonal communications services;
•  Operating systems;
• Cloud computing services;
• Advertising services;
• Web browsers;
• Virtual assistants.

To which companies does this regulation apply?

The Digital Markets Act will only apply to companies that qualify as gatekeepers and meet the three requirements set out in the Digital Markets Act.

According to the European Commission’s definition: ”Gatekeepers are companies that play a particularly important role in the internal market because of their size and their importance as gateways for professional users to access their clients.”

Before analyzing whether a company meets the aforementioned requirements, the company in question must be considered an access gatekeeper for at least one of the basic platform services referred to in the previous point. It should be noted that the same company may be designated as gatekeeper for several basic platform services.

Once a company can be described as a Gatekeeper, it will be necessary to analyze that it complies with the three requirements of the Law on Digital Markets: 

• that the company be of considerable size: that is, that the company be of a size that could affect competition in the European market. This size has been determined to be reached with an annual turnover equal to or greater than €7.5 billion, or if its equivalent market value has been at least €75 billion, and it provides a platform service in at least three countries of the European Union.
• That the company has a notorious platform between professionals and end consumers: it has been determined to have on average more than 45 million active consumer users located in the European Union per month or more than 10,000 active professional users established in the EU per year in the last fiscal year.
• That the company occupies an established and long-lasting position: Companies that meet the above condition for at least the last three fiscal years will be considered established and long-lasting.

What are the benefits of the Digital Markets Act?

Companies that have been occupying a dominant position in digital markets will be regulated, thus avoiding practices that violate the right to competition. These companies will continue to have all their opportunities for innovation in the market to offer new services, the only difference is that they will not be able to carry out unfair practices, so that they can obtain advantages over the user companies and consumers that depend on the platforms.  

Likewise, they will no longer be able to continue to favorably position their own services and products over those offered by third parties through their platform.

• User companies that rely on gatekeepers to offer their services in the digital marketplace will have a fairer business environment as platforms will have to be more transparent about their algorithms.
• In addition, consumers will be able to contact user companies outside of the gatekeeper’s platform.
• Startups and technology companies will see increased opportunities to compete in the marketplace and online platform environment without abusive conditions.
• Greater protection for consumers who will be able to choose from more and better services, will have more opportunities to switch providers if they wish and will enjoy direct access to services, for which they will pay fairer prices.