Digital Markets Act: EP committee endorses agreement with Council

On Monday, Parliament’s Internal Market Committee endorsed the provisionally reached agreement with EU governments on the Digital Markets Act (DMA) with 43 votes in favour, one against and one abstention. Together with the parallel Digital Services Act (DSA), the DMA will address a number of societal and economic issues by limiting the market power of big online platforms and to make the digital market safer, fairer and more competitive.

The rules will apply to large companies, so-called “gatekeepers” whose dominant online position make them hard for consumers to avoid. To be designated as a gatekeeper, a company has to provide a “core platform services” most prone to unfair business practices. This may include platforms such as social networks, messengers, virtual assistants, or search engines among others with EU turnover exceeding 7.5 billion euro or a market value exceeding 75 billion euro, and at least 45 million monthly end users and 10,000 annual business users.

A list of “do’s and don’ts” for gatekeepers

Gatekeepers will have to comply with a series of obligations, including ensuring the interoperability of their messaging services with smaller ones. This means that smaller platforms will be able to request dominant messaging platforms open up to enable their users to exchange messages, send voice messages or files across messaging apps. This will give users greater choice and avoid the so-called “lock-in” effect where they are restricted to one app or platform.

Gatekeepers shall allow users to easily un-install any pre-loaded software apps and to easily change default settings that steer users towards the gatekeepers products or services. Users will also have the possibility to use third-party applications and app stores.

Large online platforms will no longer be able to process users’ personal data, unless consent is explicitly given, nor will they be able to rank their own products or services more favourably (self-referencing).

Strict penalties for non-compliance

If a gatekeeper does not comply with the rules, the Commission can impose fines of up to 10% of its total worldwide turnover in the preceding financial year, and heavier penalties up to 20% in case of repeated non-compliance. In case of systematic infringements, the Commission may ban gatekeepers from acquiring other companies for a certain time (so-called killer acquisitions).

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Andreas Schwab (EPP, DE) who led the negotiations on behalf of Parliament said: “Today’s overwhelming majority shows that the Parliament stands united against the unfair practices of gatekeepers. This is the penultimate step for the DMA to enter into force – for me, it has always been important to fast-track this law while making it better. Now, after the vote in plenary in July, we as the Parliament will hold the Commission accountable for how fast it implements the provisions.”

Next steps

The provisional agreement on the sister proposal on the regulation of online platforms, the Digital Services Act, was agreed on 23 April 2022. Both proposals are expected to be put for a final vote in Parliament in July before they are formally adopted by Council and published in the EU Official Journal. The DMA regulation will enter into force 20 days following the publication and the provisions will start to apply six months thereafter.