Digital Markets Act – DMA for Transparency & Fairness!

In a digitalised world, fairness and transparency in the markets should be maintained. In order to achieve this and create fair and contestable markets, a law for digital markets – the Digital Markets Act (DMA) – has been in force in the EU since the beginning of May 2023.

What does the Digital Markets Act regulate?

The DMA or Digital Markets Act represents one of the first sets of rules aimed at comprehensively regulating the dominant position of the largest digital companies as “gatekeepers”. In doing so, the DMA complements existing EU competition rules, but does not replace or restrict them.

The Digital Markets Act (DMA) sets out clear and specific criteria by which “gatekeepers” can be identified.

Who are digital gatekeepers?

Gatekeepers are large digital platforms that provide central services such as online search engines, social media platforms or messenger services. These gatekeepers are obliged to comply with the requirements (also called “do’s”) and prohibitions (“don’ts”) laid down in the DMA.

Criteria for identifying gatekeepers:

• Annual turnover of over €7.5 billion or market value of over €75 billion.
• More than 45 million monthly end-users in the European Union.
• More than 10,000 commercial providers on the platform.
• The core platform services are provided in at least three EU Member States.

These are therefore companies that have a significant influence and a consolidated, permanent market position with their central platform services. These include the so-called GAFAM or Big Five: Google (Alphabet Inc.), Amazon (including Amazon Web Services), Facebook (now Meta), Apple and Microsoft (including the Azure cloud platform). SAP and Oracle are also digital gatekeepers according to the definition of the law.

What is the law supposed to do and what are the benefits?

The introduction of an Europe-wide legal framework for digital markets fundamentally contributes to fairness, transparency and strengthening legal certainty. In view of the continuous growth of the digital economy, the prevention of distortions of competition – due to the dominant position of the gatekeepers – is becoming increasingly important.

Small and medium-sized enterprises are the backbone of the European economy and also play a significant role in the digital space. Out of 10,000 digital platforms in Europe, 9,000 are operated by small and medium-sized enterprises.

The DMA aims to ensure that large platforms do not engage in unfair practices that could hinder competition. This allows SMEs to compete in a fair way and drive innovation. In addition, this law is intended to reduce barriers to entry into the markets.

In parallel to the positive effects on companies, consumers also benefit from the Digital Markets Act. One important point is consumer protection, which is improved by the DMA. The law restricts the monopoly position of the big players. This ensures a fair and transparent market, which goes hand in hand with low consumer prices.

The Digital Markets Act also focus on data protection. Companies must prioritize privacy and user consent. Gatekeepers are required to obtain explicit consent from users before they are allowed to serve targeted ads. In addition, companies are only allowed to use data in connection with certain products.

When does the DMA come into force?

The Digital Markets Act has been applied since 02 May 2023. Companies providing central platform services must notify the Commission within two months and provide all relevant information. The Commission then has 45 working days to take a decision to designate a specific gatekeeper.
The subsequently designated gatekeepers are required to ensure that they comply with the obligations set out in the Act within six months of the Commission’s decision.

What do gatekeepers face for breaches of the Digital Markets Act?

When gatekeepers fail to comply with the law, various consequences can occur, depending on the nature of the violation and the applicable laws. This can have legal, financial or professional consequences for the individuals or organizations concerned. One violation already costs a company up to 10% of group turnover, repeated violations even up to 20%.

Conclusion

The Digital Market Act are undoubtedly a significant step towards a fairer digital market. As the digital landscape evolves, the Digital Markets Act and the importance of data protection are becoming increasingly important.
It’s time to familiarize yourself with the Digital Markets Act and consider how they could affect your business.

In the next part, learn how (Customer) Identity & Access Management, like this one from cidaas, can help you comply with the Act in terms of user authentication and authorization.