The Digital Markets Act Explained
The Digital Markets Act (DMA) is a new regulatory tool launched by the European Union (EU) to control the influence of gatekeepers—digital giants like Google, Amazon, and Facebook. It aims to promote fair competition between digital platforms, increase choice for consumers, and promote opportunities for small businesses.
How Does the Digital Markets Act Work?
Imagine a mall owned by a large corporation (Company X) that also controls several stores inside. X has more power over other businesses because it controls the layout, marketing and advertising, and rent. It may charge higher rent to smaller businesses, place its own stores in the best locations, or even refuse to allow certain brands to operate in the mall. Smaller businesses would struggle to compete, limiting consumer choices significantly.
The Digital Markets Act (DMA) serves as the law restricting company X from misusing its power. It would require X to treat all businesses fairly, regardless of whether it owns them.
Key Provisions of the DMA
The DMA applies to all gatekeepers with a considerable impact on the digital market and introduces the following key provisions:
Obligations for Gatekeeper Platforms
Gatekeepers will have to comply with these obligations:
- Allow users to uninstall pre-installed software and choose their own default browser and search engine.
- Allow users to access and port their data.
- Prohibit self-preferencing.
- Prohibit data collection without user consent.
Interoperability Obligations
Gatekeeper platforms will have to make their messaging services interoperable with others. This means users from one service can send and receive messages from another service, even if different companies own them.
For instance, under the Digital Markets Act (DMA), WhatsApp and Telegram would have to make their messaging services interoperable. Users can exchange messages even though they use different services.
Access to Data Obligations
Gatekeepers will be required to share access to the data that they collect about businesses. This way, organizations will better understand their customers and improve their products and services.
Transparency Obligations
Gatekeepers must be more transparent about their algorithms and how they make decisions. This will help businesses understand how their products and services are ranked and to better compete with influential platforms.
Benefits of the DMA
Here are the major benefits of the Digital Marketing Act:
- Increased Competition and Innovation: The DMA will require gatekeepers to follow specific obligations and be more transparent about how they collect and use data. These changes will help smaller businesses compete in the big leagues, encouraging innovation in a fair market.
- More Choice for Consumers: The DMA will give consumers more choices through interoperable services like messaging. Users will be able to dictate the services they actually want to use.
- Fairer Prices: By promoting more competition in the digital market, businesses will have to lower their prices to attract customers, resulting in fairer consumer prices.
- Increased Privacy and Security: Businesses will have to get consumer content on their data and be more transparent about how they collect and use it. This would give consumers more control over their privacy.
Enforcement
The European Commission will enforce the DMA by investigating and sanctioning gatekeepers who don’t comply. Sanctions may include fines of up to 10% of a company’s global turnover and up to 20% for repeated infringements.
