Digital Markets Act – an effective tool in practice?

Today a few large undertakings providing core platform services are more or less controlling the digital market. Some, very difficult for other market operators to compete with. Especially if unfair practices and conditions are being used. According to new EU rules on the digital market (DMA) companies with a significant impact on the internal market could qualify as gatekeepers. It could be big tech companies such as Google, Apple and Meta. The DMA regulates gatekeepers in order to make the markets more contestable and fair. The question is though how effective will the DMA be in practice for the business users and end users if the gatekeeper does not follow the new provisions?

The purpose of the Regulation is to contribute to the proper functioning of the internal market by laying down harmonised rules ensuring for all businesses, contestable and fair markets in the digital sector across the EU. The Regulation favours business users and end users who use a gatekeeper's core platform services. A business user is someone using core platform services in a commercial or professional way for the purpose of, or in the course of, providing goods or services to end users. An end user, on the other hand, is someone using core platform services other than as a business user. All core platform services provided or offered by gatekeepers to business users, established in the EU, or end users, established or located in the EU, are covered by the Regulation.

A core platform service can be, for instance, online search engines, online social networking services, cloud computing services etc. To be designated as a gatekeeper, an undertaking must comply with three criteria, all of which must be met. An undertaking shall be presumed to satisfy the respective criterion if the thresholds for the respective criterion prescribed in the DMA is fulfilled.

1. First of all, an undertaking must have a significant impact on the internal market. This is presumed if the gatekeeper in each of the last three financial years achieves an annual European EU turnover equal to or above EUR 7,5 billion, or where its average market capitalisation or its equivalent fair market value amounted to at least EUR 75 billion in the last financial year. It also needs to provide the same core platform service in at least three Member States.

2. According to the second criterion, an undertaking must provide a core platform service which is an important gateway for business users to reach end users. This is presumed if the undertaking provides a core platform service that in the last financial year has at least 45 million monthly active end users established or located in the EU and has at least 10 000 yearly active business users established in the EU.

3. If the thresholds regarding the second criterion were met in each of the last three financial years, then the third criterion is presumed to be fulfilled. The undertaking then enjoys an entrenched and durable position in its operations or it is foreseeable that it will enjoy such a position in the near future.

An undertaking designated as a gatekeeper will have to comply with a number of obligations and prohibitions laid down in the DMA within a 6 month period. It is primarily the Commission that monitors whether the gatekeepers comply with the prescribed obligations and prohibitions. In general the obligations and prohibitions contained in the Regulation can be considered an attempt to try to achieve more openness and accessibility as well as better conditions for the users of the core platform services. The provisions concern issues regarding, for instance, the use of personal data, the use and accessibility of data, enabling of easy un-installation of any software applications on the operating system of the gatekeeper, enabling of installation and effective use of third-party software using or interoperating with the gatekeepers operating system, prohibition of more favourable treatment of the gatekeeper's own services and products, interoperability of messaging services etc.

At first glance the Regulation seems like it could become an effective tool for ensuring contestable and fair markets since unfair practices by gatekeepers are being regulated allowing other businesses the opportunity to contest and establish themselves against these larger undertakings. However for business users or end users experiencing gatekeepers who violate the provisions of the Regulation it can be difficult to affect the situation. The gatekeeper shall not prevent or restrict business users or end users from raising any issue of non-compliance with EU Law by the gatekeeper with any relevant public authority, including national courts, related to any practice of the gatekeeper. However, court proceedings are most often not an option for, inter alia, smaller companies and natural persons. Such court proceedings can be costly and time-consuming which in practice probably means that companies and natural persons with limited resources will be reluctant to take matters to court. An alternative dispute settlement mechanism exists for business users for a special purpose. In accordance with the DMA, the gatekeeper is to apply fair, reasonable, and non-discriminatory general conditions of access for business users to its software application stores, online search engines and online social networking services. For that purpose the gatekeeper must publish general conditions of access, including an alternative dispute settlement mechanism. If the gatekeeper does not comply with this obligation then the business user can use the alternative dispute settlement mechanism. In the preamble of the DMA it is stated, for instance, that the general conditions should provide for a EU based alternative dispute settlement mechanism that is easily accessible, impartial, independent and free of charge for the business user. These are only so-called "should-requirements", and the gatekeeper can consequently waive these to the disadvantage of business users. There is a possibility for business users and end users to inform the national competent authority of the Member State or the Commission directly about any practice or behaviour by gatekeepers that falls within the scope of the Regulation. A national authority and the Commission are, however, under no obligation to follow-up on the information received.

In summary it can be said that although in theory the regulation appears to be an effective tool to ensure contestable and fair markets; in practice it may be difficult for business users and end users, especially due to limited resources, to affect the situation when gatekeepers do not follow the provisions of the DMA. The regulation is new and we do not yet know how it will be applied or how it will work in practice. Still, in consideration of the above, there is a risk that the purpose of the Regulation will not effectively be achieved in practice.