The Digital Markets Act (DMA) is a landmark piece of legislation granting unprecedented powers to the European Commission to regulate large digital platforms. The DMA targets platforms that operate as gatekeepers between businesses and users, hold an “entrenched and durable position,” and operate one or more core platform services (CPSs).
Today, the European Commission (EC) announced that it has designated the first set of gatekeepers and their CPSs, namely: Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft, with 22 CPSs designated in total across the 6 companies.
The EC granted exemptions for Alphabet’s Gmail and Microsoft’s Outlook, and Samsung’s Internet Browser, despite them meeting the DMA’s user thresholds.
In parallel, the EC has opened five market investigations:
- Four 5-month market investigations to determine whether the following services should be granted exemptions despite meeting the user thresholds: Microsoft’s Bing, Edge and Microsoft Advertising, and Apple’s iMessage. The EC must decide by February 2024 whether these CPSs should also be designated. If designated, they will have to comply with the DMA’s rules by August 2024.
- One 12-month market investigation to determine whether Apple’s iPadOS should be designated on qualitative grounds despite not meeting the user thresholds. The EC must make its decision by September 2024 and, if designated, iPadOS will have to comply with the DMA’s rules by March 2025.
Other gatekeeper designation decisions may follow as other digital companies meet the DMA’s thresholds in the coming years.
What does this mean for the designated gatekeepers?
As of today, these companies must report to the EC all intended mergers and acquisitions involving another provider of core platform services or of any other services provided in the digital sector or that enable the collection of data, regardless of whether these transactions meet EU merger control thresholds. The information on these transactions will be shared with EU Member States to facilitate possible Article 22 referrals under the EU Merger Regulation. Article 22 referrals would enable the EC to review such transactions even if they do not meet EU or national statutory review thresholds.
As to the substantive rules, the designated gatekeepers will now have six months to comply with the DMA’s do’s and don’ts in relation to their designated CPSs set out in Arts. 5, 6, and 7 DMA. On March 7, the gatekeepers will be required to file their first annual compliance report with the EC outlining the compliance measures put in place for each designated CPS.
What will happen next?
Compliance preparations and regulatory dialogue. Gatekeepers designated by the EC will now begin to prepare to comply with the relevant behavioural requirements under the DMA. EU Commissioner Thierry Breton noted that tech companies “have understood that the rules of the game have changed” and “have already started discussing compliance” with the EC, which will be in charge of monitoring compliance.
Possible appeals. Gatekeepers have 2 months and 10 days to appeal the EC’s designation decisions. Amazon and Zalando appealed earlier designations under the Digital Services Act, arguing that they did not qualify as Very Large Online Platforms under that regulation and some gatekeepers may take a similar approach to these designations under the DMA. ByteDance, for example, stated that it is “extremely disappointed” with the EC’s decision to designate TikTok as a CPS, despite its arguments to the contrary.
Market investigations for further designations. Today’s designations are not exhaustive. As seen, the EC has so far opened five market investigations to decide whether to designate additional CPSs; more may follow. Other companies may also be designated at a later stage if they meet the requisite conditions. For more details see Digital Markets Act: What to Expect as the New Act Comes into Force | Cleary Gottlieb.