After two years since its proposal and after negotiations between the European Commission, the European Union and the 27 member states, the EU is about to approve one of the laws of the legislative package that was released in December 2020: the Digital Markets Law (DMA, for its acronym in English). This new regulation will include a series of measures that will put an end to the unfair commercial practices of those big technology companies. But who does it affect? What benefits does it bring to small businesses and consumers?
The Digital Markets Law, specifically, will apply to all those technology companies that operate in the European market and that have a market capitalization of 75,000 billion euros. These must also provide “a basic platform service”, such as social networks, websites or web browsers, and must have traffic of at least 45,000 million active users per month. In any case, if a company meets the aforementioned requirements, it must inform the European Commission within a maximum period of 3 months.
The European Union defines this type of company as “gatekeepers” or gatekeeper for many reasons. Among them, due to its important economic position in the member countries of the EU. Also for its “solid intermediary position” when it comes to being able to offer user information to other companies, and for its stability in the market. Some of these “gatekeepers” are: Google, Meta (Facebook), Amazon, Microsoft or Apple. Online platforms such as Booking.com or Aliexpress, the popular Alibaba store, could also meet these requirements.
The prohibitions and obligations that the new Digital Markets Law brings
The goal of Digital Markets Law it is to put an end to the abuse of power by the big technology companies and allow those small companies determined to offer digital services and platforms to also gain a foothold in the market. For this, a series of obligations and prohibitions which also intend to prevent the so-called “gatekeepers” from limiting the development of other companies with unfair conditions. These are some of those that could arrive after the publication of the law.
- Large companies will have to allow third parties to interact with their own services.
- Small businesses will be able to access the data that companies like Google, Meta, or Amazon, among others, collect when they use their platforms.
- Big tech will also need to allow small businesses to offer their products to customers outside of other platforms. They may also do so by offering different prices and conditions.
- The big tech They will not be able to collect non-public data from those small companies that use the digital platforms to use them in other services or compete against them.
- Nor will they be able to prioritize their products or services over similar ones offered by small businesses that use their platform.
- The Digital Markets Law also prohibits large companies from preventing consumers from contacting companies outside of their platforms.
On the other hand, the Digital Markets Law will also bring significant benefits to consumers. For example, large companies they will not be able to prevent users from uninstalling an app or program which comes installed by default on the system.
What happens if Amazon, Google, Meta or another big company breaks the new law?
In the event that the European Commission suspects that a company is not complying with the new Digital Markets Law, it may carry out an investigation and request additional information from the offending company —including access to its database—.
The EC will also have the power to impose different sanctions if it concludes that a company has failed to comply with the regulations. Among them, one fine of up to 10% of the total turnover worldwide in the period of one year, or a penalty payment of 5% of the average daily billing volume. Additional corrective measures may also be imposed and will be applied proportionately to the violation that the company may have committed.
The law is still pending approval by the European Parliament and the Member States, and some of the most important points could be modified. In any case, it is expected to come into force in the coming months and will be applicable throughout the European Union. It will also be reviewed every three years.