Reimagining Digital Marketplaces: EU Sets New Rules for Tech Giants

The European Commission has designated services from six major tech companies as “gatekeepers” of online messaging and video sharing.

This includes social media sites like TikTok, Instagram, Facebook and LinkedIn, messaging apps like WhatsApp and Messenger, operating systems like Android, iOS and Windows, a search engine (Google), web browsers like Chrome and Safari, belonging to US firms Alphabet, Amazon, Apple, Meta, Microsoft and Chinese company ByteDance.

The list also names six intermediation services – Google Maps, Google Play, Google Shopping, Amazon Marketplace, App Store and Meta Marketplace. YouTube for video sharing and the ad services of Google, Amazon and Meta are included too.

Why This Matters

The Digital Markets Act (DMA) aims to profoundly change the business models of tech giants, who stand accused of edging out competition by abusing their dominant position.

It imposes a range of obligations and prohibitions that must be adhered to or face hefty fines of up to 10% of their global turnover, 20% for repeat offenses. This avoids lengthy legal procedures.

The European Commission will hold the power of oversight and sanctions. Commissioner Thierry Breton, who spearheaded the legislation with Margrethe Vestager, stresses they “will not hesitate to take strong action”.

Their goal is to intervene before harmful behavior destroys competition, leading to quasi-monopolies like Google in search.

Immediate Impact

Some rules apply right away. Platforms must inform the Commission of any acquisition, no matter the size. Google can’t favor its own services in search results. Amazon can’t use seller data to then compete against them. Apple must allow other app stores on iPhones and iPads besides their App Store.

Given the massive interests involved, a new battleground between the EU and Big Tech has emerged, with complex legal fights ahead. The gatekeeper list will be regularly reviewed as markets evolve. Microsoft’s Edge browser, Bing search engine and Microsoft Advertising are under further review for possible later inclusion. So are Apple’s iMessage and iPadOS.

Microsoft welcomed the decision to currently exempt its three services meeting gatekeeper criteria. A spokesperson said, “We appreciate the Commission’s decision to open a market investigation into our request for an exemption for Bing, Edge and Microsoft Ads – which operate as challengers in the market.”

What Happens Next?

Over the coming months, further obligations take effect. Gatekeepers must allow users to easily unsubscribe from core platform services. They’re banned from ranking their own products above competitors’ on platforms. Messaging services need to open up and interoperate with smaller rivals. Rules also cover data portability and access.

Fines for non-compliance start at 1% of annual turnover, 5% for repeat breaches. National regulators help enforce rules. Germany’s Federal Cartel Office welcomed the DMA coming into force, having played a key role in the legislative process.

Competitors like Spotify have already filed complaints under the new rules, claiming Apple still unfairly restricts rivals on its devices. Epic Games founder Tim Sweeney said the DMA was a critical step towards “ending platform abuse”.

This landmark legislation demonstrates the EU’s commitment to curbing the dominance of Big Tech and reshaping digital markets. While tech giants will resist elements affecting their business models, regulators possess extensive oversight powers to force change. The coming legal challenges will define how far these rules can reach in practice.

Key Takeaways

• New EU Digital Markets Act targets 6 major tech companies
• Aims to curb anti-competitive behavior and monopolistic dominance
• 22 core platform services designated as ‘gatekeepers’ with immediate obligations
• Fines up to 10% of global turnover for breaching rules
• Rules will profoundly impact tech giants’ business models
• Oversight powers given to EU regulators to enforce change
• Legal challenges ahead as tech firms resist new constraints

Frequently Asked Questions

What is the Digital Markets Act?

The DMA is landmark EU legislation designed to regulate major technology companies and create fairer digital marketplaces by curbing anti-competitive practices.

When does the DMA take effect?

The legislation entered into force on November 1, 2022. Some obligations apply immediately, with further rules phased in over the next few months.

Which companies are affected?

The rules target 6 firms – Google, Amazon, Apple, Meta, Microsoft and TikTok’s ByteDance. 22 of their core services are designated as gatekeepers.

How will tech giants be impacted?

They face constraints on using data, self-preferencing, pre-installing own apps, and allowing interoperability. Fines for non-compliance start at 1% of global annual turnover.

Who will enforce the new rules?

The European Commission has central oversight powers, with cooperation from national regulators. Germany’s Federal Cartel Office is playing a lead enforcement role.