EU Regulation of Big Tech: Understanding the Impact of the Digital Markets Act

The Digital Markets Act (DMA), a landmark piece of legislation crafted by the European Union to temper the dominating power of major tech corporations, officially came into effect on March 7,2024. The Act, which aims to ensure fair competition and foster innovation in the digital sector, marks a new era of tech regulation on the continent.

On March 7, the six-month grace period concluded for the six conglomerates—Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft—deemed as “gatekeepers” by the EU. These companies now find themselves obligated to adhere strictly to the DMA’s regulations and are required to submit compliance reports to the European Commission.

Commissioner Thierry Breton heralded this as a pivotal moment for Europe’s digital space. “The DMA sets precise obligations and the possibility to sanction large online platforms should they not comply,” he stated. The DMA has already begun reshaping the market: European consumers now have greater control over their data, the power to make previously unavailable choices due to default settings, and the possibility to explore alternative app stores.

The DMA was initially proposed in December 2020 and subsequently adopted in September 2022, in response to the rising dominance of large tech platforms. Under this Act, “gatekeeper” platforms with significant market power must observe obligations like data sharing, interoperability, and transparency to maintain a level playing field for smaller entities.

Criteria for companies to be subject to the DMA include having core platform services such as search engines or messaging apps, 45+ million monthly active users, 10,000+ annual business users in the EU, annual revenues of €7.5 billion within the European Economic Area, and a stable market position as defined by the Commission.

In September 2023, six gatekeepers were identified, providing 22 core platform services to be regulated under the DMA. The illustrative chart below delineates which platforms and services from these companies fall under the Act’s domain. Notably, Google faces the most scrutiny with eight services under regulation.

The chart summarizes the services regulated by the DMA:

• Alphabet’s services include social networks, maps, app distribution, shopping, advertising, messaging, video sharing, search engines, browsers, and mobile operating systems.
• Amazon is recognized for its online marketplace, advertising, and integration with its branded devices’ operating systems.
• Apple’s App Store and iOS operating system.
• ByteDance’s popular social network TikTok.
• Meta’s suite of social networks, marketplace, advertising services, and messaging platforms.
• Microsoft’s professional social network LinkedIn and Windows operating system.

The scope of the DMA is expected to broaden over time. New gatekeepers may emerge or existing ones may lose their status. On March 1, the Commission announced an assessment of services from companies like Booking, ByteDance, and another unnamed entity to determine if they meet DMA criteria.

The DMA’s implementation is a decisive step towards rebalancing the digital marketplace, emphasizing transparency, equity, and user empowerment. As the digital landscape evolves, so too will the regulations shaping it, aiming to cultivate an environment where innovation can flourish without being overshadowed by tech goliaths.