Developments in DMA land: EU tags Big Tech as first Gatekeepers
The DMA empowers the Commission to label certain digital platforms as ‘gatekeepersʼ through designation decisions if they serve as crucial gateways between businesses and consumers as so-called ‘core platform servicesʼ. The DMA mandates that certain companies must notify their own (potential) gatekeeper status to the Commission, whereupon the Commission subsequently undertakes a 45-day review process to determine whether it will issue a final designation decision, thereby branding these companies with the gatekeeper status for all or some of their core platform services.
Thus far, six designation decisions have been issued by the Commission, whereby gatekeeper status has been conferred to six companies in relation to 22 core platform services, which include Alphabet (Google Maps, Google Play, Google Shopping, YouTube, Google Search, Google (ads), Google Chrome and Google Android), Meta (Facebook, Instagram, WhatsApp, Messenger, Meta Marketplace and Meta (ads)), Apple (App Store, Safari and iOS), Amazon (Amazon Marketplace and Amazon (ads)), ByteDance (TikTok) and Microsoft (LinkedIn and Windows PC OS). The tech giants are now tasked with preparing a comprehensive compliance report outlining their adherence to each of the DMA's dos and don'ts, for which they have six months.
The DMA, which has been in force since November 2022 and has applied since May 2023, aims to promote fair and competitive markets in the digital sector by regulating gatekeepers, who play a pivotal role in the digital economy.
The deadline for potential gatekeepers to notify the Commission if they meet the thresholds for gatekeepers expired on 3 July 2023. In these notifications, the companies could submit arguments if they believed that, while meeting the quantitative thresholds found in the DMA, they nonetheless did not meet the necessary qualitative requirements.
Seven companies, including multinational conglomerate Samsung, submitted notifications to the Commission of their potential gatekeeper status. Notably, Gmail, Outlook.com, and Samsung Internet Browser – although they met the quantitative DMA thresholds – were deemed not to qualify as gatekeepers based on the qualitative criteria due to successfully presented arguments by Alphabet, Microsoft, and Samsung. Consequently, these services have not been designated as core platform services, and Samsung has therefore not been designated as a gatekeeper for any core platform service.
Microsoft and Apple made similar submissions to the Commission concerning their core platform services Bing, Edge, Microsoft Advertising, and iMessage, but their status remains pending. The Commission has determined that it needs additional time to evaluate the status of these five services. As a result, the Commission has launched four market investigations to determine whether they should be excluded from a gatekeeper designation, despite meeting the notification thresholds. These investigations are expected to be completed by February 2024 at the latest.
In parallel, the Commission has launched a market inquiry to assess whether iPadOS should be included in the list of recognized core platform services, despite it not meeting the established quantitative notification thresholds. The Commission has 12 months to give Apple a conclusive decision.
The DMA's dos obligate gatekeepers to comply with, for example, specific limitations on data collection and interoperability criteria. The don'ts contain a broad set of rules prohibiting certain types of anti-competitive behaviour, such as user lock-ins, self-preferencing, and mandating app store use. The Commission will closely monitor the implementation and compliance with these obligations. Failure to comply can result in severe fines of up to 10% of a company's total worldwide turnover, which can increase to 20% in the event of repeated infringements. Moreover, in cases of systematic non-compliance, the Commission may mandate additional remedies, including divestiture of business segments or bans on further acquisitions.
While the gatekeepers' identities come as no shock, it remains to be seen which among them will opt to contest the designations or seek exemptions. ByteDance has already voiced its dissatisfaction with the labelling of its TikTok platform as a gatekeeper. The company argues that the Commission should have conducted a thorough market investigation to ascertain whether TikTok qualifies as a core platform service under the DMA. Despite filing submissions challenging the notion of TikTok having a substantial impact on the EU's internal market, it has been designated as a gatekeeper in the category of social networks.
It would be interesting, certainly for other companies and services in the digital economy that have the potential to become ‘gatekeepers’ in the future, to gain more insight into the Commission’s designation decisions. Since the decisions have not yet been made public, it remains uncertain for now which factors influenced the Commission's decisions to either designate or not to designate gatekeeper status to a core platform service that meets the quantitative notification criteria - or to assign such status to services that do not meet these thresholds.
This article was published in the Competition Newsletter of October 2023. Other articles in this newsletter:
