What is the Digital Markets Act (DMA)?

In the first months of 2024, several major tech companies have made changes to their platform offerings, citing new obligations under the EU Digital Markets Act (DMA).

Meta has implemented a new paid option for EU-based users who do not wish to consent to behavioral advertising, and Apple announced it would no longer offer progressive web apps in the EU.

And in other recent DMA news, the European Commission confirmed that the DMA does not apply to Apple’s iMessage platform or Microsoft’s Bing, Edge, and advertising services.

What do these announcements mean? Let’s explore who the DMA covers and what the law requires.

What are the goals of the DMA?

The DMA aims to regulate competition among large online businesses, known as “Gatekeepers” under the law.

The main goals of the DMA include:

• Ensuring consumers and business users have a broad choice of online services
• Fostering fair market conditions
• Enabling competition and innovation among new online businesses

To achieve this, the DMA sets rules for Gatekeepers around sharing data and obtaining consumers’ consent before using their data in certain ways.

We’ll look at these new rules below. But first, let’s define “Gatekeepers”.

Regulating the internet’s “Gatekeepers”

A company is a Gatekeeper if it meets the following conditions:

• It has a significant market impact,
• It provides an important core platform service, and
• It has an entrenched and durable market position.

Each of these terms has its own legal definition.

What’s a ‘significant market impact’ under the DMA?

A company has a “significant market impact” under the DMA if:

• Either:
  • It had an annual EU turnover of €7.5 billion or more in the previous three financial years, or
  • It had a market capitalization averaging €75 billion or more in the previous financial year, and
• It provides a “core platform service” (see below) in three or more EU countries.

What’s a ‘core platform service’ under the DMA?

A “core platform service” is a service with both:

• Forty-five billion or more EU monthly active users (MAUs), and
• One hundred thousand or more EU yearly active business users.

There are various types of core platform services identified in the DMA, including:

• Search engines
• Social networks
• Browsers
• Operating systems
• Cloud services
• Virtual assistants

What’s an ‘entrenched and durable market position’ under the DMA?

A business has an “entrenched and durable position” in the EU market if it has provided a core platform services for three or more years.

Which companies are Gatekeepers?

So far, the European Commission has designated the following six companies as Gatekeepers, providing the following “core platform services”:

• Alphabet
  • Google Search
  • Google Maps
  • Google Play
  • Google Shopping
  • Google (advertising services)
  • Android
  • Google Chrome
  • YouTube
• Amazon
  • Amazon Marketplace
  • Amazon (advertising services)
• Apple
  • App Store
  • iOS
  • Safari
• ByteDance
  • TikTok
• Meta
  • Facebook
  • Instagram
  • WhatsApp
  • Messenger
  • Meta Marketplace
  • Meta (advertising services)
• Microsoft
  • LinkedIn
  • Windows

As well as Apple iMessage and Microsoft’s Bing, Edge, and advertising services, some other companies have successfully argued that some of their platforms don’t meet the “core platform services” thresholds, including:

• Google (Gmail)
• Microsoft (Outlook)
• Samsung (Internet browser)

Other platforms are under investigation to confirm whether they meet the DMA’s thresholds.

What does the DMA require?

The DMA places many obligations and prohibitions on Gatekeepers and their core platform services, including:

• Enabling “interoperability” with other platforms
• Publishing data regarding advertising and user activity
• Enabling business users to make offers and conclude sales outside of their platforms
• Not treating their own products and services more favorably than others (e.g., in search results)
• Enabling users to uninstall pre-installed apps on devices and operating systems
• Not tracking users’ activity across their own platforms without consent

What are the penalties for violating the DMA?

Penalties for violating the DMA include the following:

• Up to 10% of global turnover
• For repeated violations: Up to 20% of global turnover
• Up to 5% of average daily global turnover per day
• Forcing the Gatekeeper to sell part of its business