After several months of negotiations, a compromise has been sealed between the European institutions which should make it possible to curb anti-competitive practices.
EU Member States, the Commission and the European Parliament reached an agreement on Thursday March 24 on new legislation which should put an end to the abuse of a dominant position by digital giants. After several months of negotiations, a compromise has been sealed between the European institutions on the Digital Markets Act (DMA), which should impose on Gafam – Google, Apple, Meta (Facebook), Amazon and Microsoft – a series of obligations and prohibitions to curb anti-competitive practices.
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For the French Secretary of State for Digital, Cédric O, this is “the most important economic regulation of recent decades”. And it could have international repercussions. “The agreement ushers in a new era of technology regulation around the world. The Digital Markets Act puts an end to the ever-increasing dominance of big tech companies”said MEP Andreas Schwab, rapporteur for the text.
The regulation, which is expected to enter into force in January 2023, marks a change in philosophy in the fight against the abuse of large platforms. After years of chasing in vain after the offenses of these multinationals in endless legal proceedings, Brussels wants to act upstream, by imposing twenty rules on them to respect under penalty of dissuasive fines. Objective: to act quickly and effectively, before abusive behavior has destroyed competition.
twenty rules
The text only targets the biggest platforms: Gafam and perhaps a handful of other groups such as the online booking company Booking or the social network TikTok. The list remains to be defined according to already established criteria of turnover, market capitalization and number of users. There is “will have far-reaching consequences” on the activity of these firms, believes Katrin Schallenberg, of the law firm Clifford Chance.
In a reaction sent to AFP, the American group Apple said “concerned” by “certain provisions (who) will create unnecessary privacy and security vulnerabilities for our users, while others will prohibit us from charging for the intellectual property in which we invest heavily”. “While we support many of the DMA’s ambitions on consumer choice and interoperability, we remain concerned about the potential risks to innovation and the variety of choices offered to Europeans”, reacted a spokesperson for Google, who said he wanted to study the final text and cooperate with regulators for its implementation. Meta and Amazon did not respond to AFP’s requests.
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A free choice of software application stores will be introduced, in particular making it possible to circumvent the Apple App Store, which has long been in the sights of the Commission. The legislation establishes Commission control over all takeovers of these giants, regardless of the size of the target, to limit the capture of innovation by start-ups and avoid takeovers with the sole purpose of killing a competitor. In all, it lays down around twenty rules to curb the abuses observed in recent years.
Thus, the major platforms will be prohibited from showing favoritism towards their own services in search engine results, as Google has been accused of doing with its online sales site Google Shopping. The new law will prevent these giants from using the data generated on their site by corporate clients to better compete with them, as Amazon has been accused of.
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The text, which was one of the main priorities of the French Presidency of the Council of the EU, will also better protect users by making their consent compulsory for the crossing of data from several online services for advertising profiling purposes. It will prevent the imposition of pre-installed software on computers or phones, such as browsers or music applications, and facilitate the use of alternative products.
In the home stretch, the European Parliament also obtained the addition of the interoperability of messaging services which will allow, for example, a Signal user to communicate with a contact using WhatsApp (Meta). Fines of up to 10% of global sales are provided for in the event of an infringement, and even 20% in the event of a repeat offense.
The European Union is putting in place “immediately applicable obligations, short and strict deadlines (to correct any faults) and dissuasive sanctions”, summed up the European Commissioner for the Internal Market, Thierry Breton, who presented this project in December 2020 with his Competition counterpart, Margrethe Vestager.