The European Union agreed on Thursday to one of the world’s most far-reaching laws to address the power of the biggest tech companies, potentially reshaping app stores, online advertising, e-commerce, messaging services and other everyday digital tools.
The law, called the Digital Markets Act, is the most sweeping piece of digital policy since the bloc put the world’s toughest rules to protect people’s online data into effect in 2018. The legislation is aimed at stopping the largest tech platforms from using their interlocking services and considerable resources to box in users and squash emerging rivals, creating room for new entrants and fostering more competition.
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U.S tech giants face tough new rules as EU countries, lawmakers clinch deal
Alphabet’s Google, Amazon, Apple, Meta and Microsoft may have to change their core business practices in Europe as EU countries and EU lawmakers on Thursday clinched a deal on landmark rules to curb their powers.
France, which currently holds the rotating EU presidency, said in a tweet that there was a provisional agreement after eight hours of talks.
EU industry chief Thierry Breton said in a tweet that the deal would ensure fair and open digital markets.
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Europe’s antitrust chief Margrethe Vestager on Thursday won backing from European Union members and EU lawmakers for her proposal, the Digital Markets Act (DMA), to rein in the powers of the tech giants via legislation for the first time, rather than lengthy antitrust investigations.
EU agrees sweeping new digital rules in effort to curb big tech’s power
The European Union reached an agreement on landmark digital rules to rein in online “gatekeepers” such as Google and Facebook’s parent company, Meta.
EU officials agreed late on Thursday on wording for the bloc’s Digital Markets Act, part of a long-awaited overhaul of digital regulations with major implications for the global tech market. The act, which still needs other approvals, seeks to prevent the biggest of tech firms from dominating digital markets through the threat of fines or even the possibility of a company breakup.
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Deal on Digital Markets Act: EU rules to ensure fair competition and more choice for users [news release]
On Thursday evening, Parliament and Council negotiators agreed new EU rules to limit the market power of big online platforms.
The Digital Markets Act (DMA) will blacklist certain practices used by large platforms acting as “gatekeepers” and enable the Commission to carry out market investigations and sanction non-compliant behaviour.
The text provisionally agreed by Parliament and Council negotiators targets large companies providing so-called “core platform services” most prone to unfair business practices, such as social networks or search engines, with a market capitalisation of at least 75 billion euro or an annual turnover of 7.5 billion. To be designated as “gatekeepers”, these companies must also provide certain services such as browsers, messengers or social media, which have at least 45 million monthly end users in the EU.and 10 000 annual business users.
During a close to 8-hour long trilogue (three-way talks between Parliament, Council and Commission), EU lawmakers agreed that the largest messaging services (such as Whatsapp, Facebook Messenger or iMessage) will have to open up and interoperate with smaller messaging platforms, if they so request. Users of small or big platforms would then be able to exchange messages, send files or make video calls across messaging apps, thus giving them more choice. As regards interoperability obligation for social networks, co-legislators agreed that such interoperability provisions will be assessed in the future.
Parliament also ensured that combining personal data for targeted advertising will only be allowed with explicit consent to the gatekeeper. They also managed to include a requirement to allow users to freely choose their browser, virtual assistants or search engines.
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 20% in case of repeated infringements. In case of systematic infringements, the Commission may ban them from acquiring other companies for a certain time.
After the negotiations, the rapporteur from Parliament’s Internal Market and Consumer Protection Committee, Andreas Schwab (EPP, DE), said:
“The agreement ushers in a new era of tech regulation worldwide. The Digital Markets Act puts an end to the ever-increasing dominance of Big Tech companies. From now on, they must show that they also allow for fair competition on the internet. The new rules will help enforce that basic principle. Europe is thus ensuring more competition, more innovation and more choice for users.
With the Digital Markets Act (DMA), Europe is setting standards for how the digital economy of the future will function. It will now be up to the European Commission to implement the new rules quickly.
As the European Parliament, we have made sure that the DMA will deliver tangible results immediately: consumers will get the choice to use the core services of big tech companies such as browsers, search engines or messaging, and all that without losing control over their data.
Above all, the law avoids any form of overregulation for small businesses. App developers will get completely new opportunities, small businesses will get more access to business-relevant data and the online advertising market will become fairer.”
After the legal text is finalised at technical level and checked by lawyer-linguists, it will need to be approved by both Parliament and Council. Once this process is completed, it will come into force 20 days after its publication in the EU Official Journal and the rules will apply six months after.
Digital Markets Act: Commission welcomes political agreement on rules to ensure fair and open digital markets [news release]
The Commission welcomes the swift political agreement reached yesterday between the European Parliament and EU Member States on the Digital Markets Act (DMA). The regulation, agreed in slightly more than a year after it was proposed, is among the first initiatives of its kind to comprehensively regulate the gatekeeper power of the largest digital companies.
Executive Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager, said: “What we want is simple: Fair markets also in digital. We are now taking a huge step forward to get there – that markets are fair, open and contestable. Large gatekeeper platforms have prevented businesses and consumers from the benefits of competitive digital markets. The gatekeepers will now have to comply with a well-defined set of obligations and prohibitions. This regulation, together with strong competition law enforcement, will bring fairer conditions to consumers and businesses for many digital services across the EU.”
Commissioner for the Internal Market Thierry Breton said: “This agreement seals the economic leg of our ambitious reorganisation of our digital space in the EU internal market. We will quickly work on designating gatekeepers based on objective criteria. Within 6 months of being designated, they will have to comply with their new obligations. Through effective enforcement, the new rules will bring increased contestability and fairer conditions for consumers and business users, which will allow for more innovation and choice in the market. We are serious about this common endeavour: no company in the world can turn a blind eye to the prospect of a fine of up to 20% of their global turnover if they repeatedly break the rules.”
The DMA will apply to gatekeepers, companies which create bottlenecks between businesses and consumers, and sometimes even control entire ecosystems, made up of different platform services such as online marketplaces, operating systems, cloud services or online search engines. These gatekeepers will be subject to a number of clearly defined obligations and prohibitions. These are established by reference to the most unfair market practices, or practices that create or strengthen barriers for other companies, with the overall aim of ensuring the contestability of gatekeepers’ digital services.
At the same time, the DMA will create an effective enforcement mechanism ensuring rapid compliance with precise obligations.
The DMA is part of the ambitious reform of the digital space together with the Digital Services Act, aiming at ensuring a safe and accountable online environment. Taken together, this package will establish a comprehensive set of new rules for all digital services, including social media, online market places, and other online platforms that operate in the European Union. This is a key component of the European digital strategy to make Europe fit for the digital age.
The DMA will complement the enforcement of competition law at EU and national level. The new rules are without prejudice to the implementation of EU competition rules and national competition rules regarding unilateral behaviour.
The political agreement reached by the European Parliament and the Council is now subject to formal approval by the two co-legislators. Once adopted, the DMA Regulation will be directly applicable across the EU and will apply six months after entry into force.
The Commission proposed the DMA in December 2020 to address the negative consequences arising from certain behaviours by online platforms acting as digital “gatekeepers” to the EU single market.
When a gatekeeper engages in business practices such as favouring their own services or preventing their own business users from reaching consumers, it can prevent or slow down valuable and innovative services of its business users and competitors. Furthermore, when a gatekeeper engages in unfair practices such as imposing unfair access conditions to their app store or preventing installation of applications from other sources, consumers are likely to pay more or are even effectively deprived of the benefits that alternative services might have brought.
The DMA will be deployed through a robust supervisory architecture, under which the Commission will be the sole enforcer of the rules, in close cooperation with authorities in the EU Member States. The Commission will be able to impose penalties and fines of up to 10% of a company’s worldwide turnover, and that may, in the event of repeated infringements, reach up to 20% of such turnover. In the case of systematic infringements, the Commission will also be able to impose any behavioural or structural remedies necessary to ensure the effectiveness of the obligations, including a ban on further acquisitions relevant to the infringement.
Finally, the DMA gives the Commission the power to carry out market investigations that will ensure that the obligations set out in the regulation are kept up-to-date in the constantly evolving reality of digital markets.
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