The DMA law – Digital Market Act

The DMA law, or Digital Markets Act, is a European Union regulation adopted on September 14, 2022. It aims to combat anti-competitive practices by large digital platforms, such as Google, Amazon, Apple, Facebook and Microsoft.

Rules of the DMA law – Digital Market Act

The DMA law defines a set of rules that these platforms must respect. They are divided into two categories: obligations and prohibitions.

Obligations of the DMA law – Digital Market Act

The DMA law defines a set of rules that these platforms must respect. These rules are called “obligations”.

The obligation not to favor their own products and services over those of companies that use their platforms

This obligation is one of the most important in the DMA law. It aims to prevent digital platforms from giving themselves an unfair advantage over their competitors.

For example, Google will no longer be able to display its own products and services first in search results, even if they are less relevant than those of other companies. Amazon will no longer be able to favor its own products and services in its recommendations, or in the search results of its internal search engine.

The obligation to provide companies with clear information on how they collect and use their data

This obligation aims to give businesses a better understanding of how their data is collected and used by digital platforms.

Platforms will need to provide businesses with clear information about the types of data they collect, how they collect it, why they collect it, and how they use it.

The obligation to allow users to uninstall their applications without difficulty

This requirement aims to give users more control over their devices.

Platforms will need to make it easier for users to remove apps from their devices, even if those apps come pre-installed.

The obligation to offer greater transparency on their algorithms

This obligation aims to give users a better understanding of how digital platforms work.

Platforms will need to explain how their algorithms work, and provide users with information on how these algorithms influence their experiences.

Concrete examples

Here are some concrete examples of how DMA law obligations could affect users:

• Users could have more choices when it comes to products and services. Platforms will no longer be able to promote their own products and services, which could give smaller, more innovative companies a chance to compete with digital giants.
• Users could have more control over their data. Platforms will need to obtain consent from users before collecting or using their data, which could give users more power over how their data is used.
• Users could have a better online experience. Platforms will need to be more transparent about their algorithms and practices, which could help users better understand how the platforms work and make informed decisions.

Prohibitions of the DMA law – Digital Market Act

The DMA law defines a set of rules that these platforms must respect. These rules are called “bans”.

The ban on collecting and using company data without their consent

This ban aims to protect the privacy of companies. Platforms will no longer be able to collect or use company data without their explicit consent.

The ban on imposing abusive contractual conditions on companies

This ban aims to protect businesses against unfair commercial practices by digital platforms. Platforms will no longer be able to impose unfair contractual terms on businesses, such as terms that give them an unfair advantage.

The ban on discriminating against companies on the basis of their size or geographic origin

This ban aims to ensure that all companies, regardless of their size or geographic origin, have the same opportunity to compete with large digital platforms. Platforms will no longer be able to discriminate against companies on the basis of their size or geographic origin.

The ban prevents users from uninstalling apps

This ban aims to give users more control over their devices. Platforms will no longer be able to prevent users from uninstalling apps from their devices, even if those apps are pre-installed.

Concrete examples

Here are some real-world examples of how the DMA law’s bans could affect users:

• Users could have more control over their data. Platforms will no longer be able to collect or use user data without their consent, which could give users more power over how their data is used.
• Companies could have more chances to compete with large digital platforms. Platforms will no longer be able to impose unfair contract terms on businesses, which could level the playing field for smaller, more innovative businesses.
• Users could have a better online experience. Platforms will no longer be able to discriminate between businesses based on their size or geographic origin, which could give users more choice and better deals.

Criteria for applying the DMA – Digital Market Act

The DMA law applies to digital platforms that meet the following criteria:

Annual sales

The platform must have an annual turnover of at least 7.5 billion euros in the European Union. This criterion aims to ensure that the law applies to digital platforms which are of a certain size and which are therefore susceptible to abuse of a dominant position.

To illustrate this criterion, we can take the example of Google. In 2022, Google achieved revenue of $257.6 billion, including $75.3 billion in Europe. This means that Google meets this criterion without problem.

Number of monthly active users

The platform must have at least 45 million monthly active users in the European Union. This criterion aims to ensure that the law applies to digital platforms which are used by a large number of people and which are therefore likely to have a significant impact on the market.

To illustrate this criterion, we can take the example of Facebook. In 2022, Facebook had 2.9 billion monthly active users worldwide, including 440 million in Europe. This means that Facebook meets this criterion without problem.

Significant influence on the domestic market

The platform must exert significant influence on the internal market. This criterion is the most subjective of the three. It is evaluated based on a number of factors, such as the platform’s market share, its market power, its ability to block market access for competitors, and its impact on innovation.

To illustrate this criterion, we can take the example of Amazon. In 2022, Amazon held a 44% market share of e-commerce in France. This means that Amazon has significant influence on the French domestic market.

Penalties of the DMA law – Digital Market Act

The DMA law provides for severe penalties for digital platforms that do not comply with its rules. These sanctions can go up to 10% of the platform’s global turnover.

Types of sanctions

The sanctions provided for by the DMA law can be of two types:

Fines

Fines can be imposed on digital platforms that do not comply with the obligations or prohibitions of the DMA law. The amount of the fine can be up to 10% of the platform’s global turnover.

For example, if a digital platform is convicted of favoring its own products and services over those of competitors, it could be fined several billion euros.

Corrective measures

The European Commission can also order digital platforms to take corrective measures to comply with the DMA law. These measures may include ending an anti-competitive practice, amending a contract or providing information to competition authorities.

For example, if a digital platform is convicted of imposing unfair contractual terms on businesses, it could be forced to modify its contracts to make them fairer.

The sanction procedure

The sanction procedure of the DMA law is as follows:

1. The European Commission receives a complaint from a company or organization, or it opens an investigation on its own initiative. For example, a company that believes it has been the victim of an anti-competitive practice by a digital platform can file a complaint with the European Commission.
2. The European Commission investigates the complaint or investigation and determines whether the digital platform has violated the DMA Act. This investigation can last several months, or even several years.
3. If the European Commission considers that the digital platform has violated the DMA law, it sends it an observation letter. This observation letter informs the digital platform of the European Commission’s suspicions and gives it one month to respond.
4. The digital platform has one month to respond to the observation letter. Their response must explain why they believe they have not violated the DMA law.
5. If the European Commission is not satisfied with the response of the digital platform, it may fine it or order it to take corrective measures. The European Commission’s decision is subject to appeal to the Court of Justice of the European Union.

The implications of sanctions

The sanctions provided for in the DMA law are designed to deter digital platforms from committing abuses of dominant positions. They could have a significant impact on the behavior of digital platforms and on the European digital market.

For example, dissuasive fines could dissuade digital platforms from favoring their own products and services over those of competitors. The remedies could force digital platforms to open their platforms to competition and give users more control over their data.

Implementing the DMA law will be a challenge for the European Commission. The Commission will need to ensure that sanctions are applied fairly and effectively, and that digital platforms comply with the law.

The DMA Act is an important step toward creating a fairer and more competitive digital market. It has the potential to benefit users, businesses and the European economy as a whole.