The EU's proposed Digital Markets Act has taken a key step towards becoming law with approval from the European Parliament's Internal Market and Consumer Protection Committee. The full parliament is expected to approve the text in December, allowing negotiations to start with the EU Council on a final version of the law designed to rein in predatory commercial practices by large internet platforms.
First proposed in December 2020 by the European Commission, the DMA targets so-called gatekeepers - large online platforms that serve millions of consumers and thousands of businesses with key online services. Under the text approved by the Internal Market committee, to qualify as a gatekeeper, companies would need to provide a core platform service in at least three EU countries and have at least 45 million monthly end-users, as well as more than 10,000 business users. Even below these thresholds, the Commission could name companies as gatekeepers if they meet certain conditions.
No targeted advertising to minors
Gatekeepers would be subject to increased regulatory scrutiny and be expected to refrain from imposing unfair conditions on businesses and consumers. In addition to the limits on commercial practices proposed by the Commission, MEPs want the big internet platforms to reduce the use of targeted advertising and profiling. If the proposal is approved, targeted advertising based on personal data would require an explicit opt-in by the person, in line with the EU's General Data Protection Regulation, and such targeting would be forbidden entirely for minors.
Fines up to 20% of turnover
Gatekeepers that don't adhere to the restrictions could face sanctions from the European Commission, including fines of at least 4 percent and up to 20 percent of annual turnover, under the text approved by MEPs. Gatekeepers that repeatedly violate or do not implement the rules could also face structural or behavioural remedies. This may include a requirement for gatekeepers to inform the Commission of all planned acquisitions, regardless of size. The Commission would then have the power to ban so-called 'killer takeovers' in areas covered by the DMA in order to remedy or prevent further damage to the market.
Enforcement of the DMA would lie entirely with the Commission. It would be supported by a "European High-Level Group of Digital Regulators", the MEPs decided, in order to facilitate cooperation with national competition and consumer protection authorities.
National ministers from around the EU are expected to approve later this week the Council's position on the DMA. A trilogue between the Parliament, Council and Commission will then negotiate a final text of the law, with the aim of reaching a deal in the first half of 2022 under the French presidency of the EU.
Unintended consequences
Industry group CCIA, which counts among its members many companies expected to be named gatekeepers, such as Google, Facebook, Apple and Amazon, warned that the text approved by MEPs may go too far and have unintended consequences. "The DMA borrows remedies from ongoing competition enforcement cases and applies them inflexibly and on a one-size-fits-all basis to all platform services of companies designated as 'gatekeepers'," the CCIA said in a statement. The group's own research shows little evidence supporting such extensive intervention, and found that some of the amendments could end up harming the consumers and businesses using online platforms.
