The EU Digital Markets Act: a levelling of the playing field?
What is happening?
The Digital Markets Act (the DMA) forms part of the EU’s Digital Services Act package, placing new obligations on “gatekeeper” platforms who offer core platform services to business and end-users established or located in the EU, irrespective of the gatekeepers’ place of establishment, residence, or any national laws applicable to their service. Jurisdictions outside of the EU are expected to emulate this landmark regulatory ‘ex-ante’ regime for digital markets. For example, the UK’s Digital Markets, Competition and Consumer Bill that looks to enforce a parallel position in the UK (see our article).
Why does it matter?
The legislation is designed to provide smaller businesses with opportunities to compete and innovate in the online platform environment. It’s therefore important that the consumers, businesses and platforms who rely on gatekeepers’ services to deliver their business offering to end-users (“non-gatekeepers”), understand how the DMA will affect them and are prepared to take advantage of new business opportunities that arise within the retail industry as a result.
Why should non-gatekeeper organisations pay attention?
The DMA is expected to bite on the largest digital platforms, such as large e-commerce platforms, search engines, app stores, and messenger services and, in September, the European Commission designated six organisations as gatekeepers: Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft. The Commission has provided examples of expected behaviours (‘do’s and don’ts’) that gatekeepers must exhibit within six months of their designation (see our Snapshot). Whilst non-gatekeepers fall outside the direct application of the DMA, the next 12 months will provide a welcome chance for them to identify the knock-on effects of these new behaviours required of the gatekeeper platforms and identify potential opportunities for retailers and consumer brands alike, to exploit.
- the DMA prohibits gatekeepers from the cross-use or combining of personal data obtained from their core platform service or from third parties who advertise on their service, with data obtained from another of their services, without permission. To the extent that the relevant consents to process users’ data in this way cannot be obtained, this may impact the effectiveness of services used by retailers and businesses, with behavioural advertising being a case in point
- the DMA introduces various prohibitions against self-preferencing by gatekeepers (see our Snapshot) including requiring end-users to use gatekeeper operating systems (eg payment systems for in-app purchases or other features) for business-user services provided via the gatekeeper’s core platform services. Retailer business-users may want to take advantage of this new obligation to introduce their own interoperable systems or features, with the added benefit of their preferred UX and branding and a smoother technical journey
- the DMA requires gatekeepers to grant business users real time access to data generated by them and by end users from their use of the core platform service. Increased access to such data and the ability to port the data to business users’ own systems, may generate opportunities for new and innovative consumer insights and the consequent tailoring of user experiences in relation to, for example, online shopping and booking.
What action should you consider?
While gatekeepers can face extensive fines for non-compliance (up to 10% of a company’s global annual turnover in the case of repeated infringements), for non-gatekeepers who utilise the services of gatekeepers, the impacts and next steps are perhaps not as obvious.
We recommend that non-gatekeepers who make use of gatekeeper services familiarise themselves with the obligations placed on their gatekeeper business partners and remain alive to any net new rights they might gain (for instance increased choice, flexibility and interoperability), but also consider how limitations placed on gatekeepers might impact the services that they use.
Asking questions now and taking proactive measures in advance of the gatekeeper compliance deadline of 6 March 2024 will put non-gatekeepers in the best position to make the most of changes to business models, adapt affected commercial strategies, and implement changes required to user journeys, in a timely manner.