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The ‘big tech’ giants currently hold immense power over the market, but change is just around the corner thanks to the upcoming Digital Markets Act (DMA). This legislation promises to level the playing field and usher in a new era of fair competition for service providers. One significant aspect is the obligation for big tech companies, which the DMA refers to as ‘gatekeepers’, to make all relevant platform data available to users and/or their service providers. This will open up possibilities for service providers to develop new value propositions. In this blog, we outline the basics and discuss opportunities and early-phase hurdles so that you can start preparing for the DMA now and get a head start on your competition.

By capturing the value of platform economics, big techs have gained too much influence in the European data economy

Over the last decade, big tech companies have taken a firm hold on our lives. Our everyday behaviour is closely monitored and influenced through the various devices and apps that we use. But besides consumers, businesses are also increasingly dependent on big-tech platform infrastructure to connect with their customers (e.g. marketing/advertising on Facebook/Google, sales via Amazon, communication/support channels such as WhatsApp). All these online interactions lead to an increase in digital transaction volume, and subsequently the creation of data. As these transactions take place on big tech infrastructure, however, the data and related insights are only partially made available to the users and businesses involved. Meanwhile, the big tech companies retain a full overview of all data and insights across all users and businesses. 

The Digital Markets Act has been created by Europe as an effort to combat unfair competition dynamics in the European data economy

Numerous anti-competition investigations and lawsuits in recent years indicate that big tech companies are using the data on their platforms and their dominant positions in the digital space to unfairly compete with other businesses (e.g. the Apple App Store purchasing system, Amazon competing on its own platform, Google advertising services). Competition regulators have called for a unified approach to deal with these unfair competition dynamics instead of fighting the same battles in each Member State. In 2020, the European Commission released its ‘Strategy for Data’, proposing a set of legislative acts aimed at transforming the European data economy. One of these acts is the ‘Regulation on contestable and fair markets in the digital sector’, or the ‘Digital Markets Act’ (DMA) for short. The DMA has been specifically developed to combat problems such as those mentioned above by creating rules for dominant big tech companies to ensure a more level playing field for other service providers.

In a nutshell: what is the Digital Markets Act?

1. Goal of the DMA: fix network effects

The DMA aims to fix the current situation in which only big techs fully benefit from the network effects that occur due to the nature of digital platform markets, since this creates unfair advantages for big techs over other service providers. To this end, the DMA consists of rules and obligations specifically for dominant big tech companies.

2. Timelines: the DMA officially entered into force on 1 November 2022 and has a phased implementation timeline:

The DMA starts applying in May 2023, initiating the formal designation process for deciding which big tech companies will fall under the DMA obligations. The obligations will start applying for big techs in March 2024 at the earliest, while some very specific interoperability requirements have implementation timelines of 1-4 years.

3. Designated big tech companies are called ‘gatekeepers’ under the DMA, and are defined according to the following criteria:

• They offer a core platform service in at least three Member States. These services include online search engines such as Google search and online intermediary services such as Amazon (see Table 1).
• They act as an important gateway for business users to reach end users, i.e. the company has achieved a turnover of EUR 7.5 billion in the past three years, or its average market capitalisation or its equivalent fair market value was least EUR 75 billion in the last financial year.
• They have a significant and ongoing impact on the internal market, which is measured in quantitative criteria (45 million active monthly end users and 10,000 business users for the last three consecutive financial years).
• In addition to the quantitative criteria above, the DMA also allows the European Commission to interpret the parts shown in bold as qualitative criteria. This serves as a mechanism for targeting companies with comparable market dominance, but which fall short of the quantitative requirements (e.g. highly dominant companies only operating in few Member States and not reaching 45 million monthly users).