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Limited the power of Big Tech with the final text of the DMA


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The European Council and Parliament approved last Thursday night the definitive wording of the Digital Markets Act (DMA), the law that must regulate in advance the practices of digital giants in the European Union and severely sanction them in case of non-compliance. The DMA should enter into force next October and will be complemented by the Digital Services Act (DSA), currently under discussion, and dedicated to online content. A preliminary agreement has also been reached, by surprise, on the transfer of data between the United States and Europe, which will succeed the Private Shield, invalidated by the European Court almost two years ago.


The DMA aims to be a true revolution in European electronic commerce legislation, which dates back to 2000 and is increasingly obsolete and inoperative. Instead of the European Commission imposing fines for what it considers breaches of its current legislation, which are subsequently appealed repeatedly by the technology giants and whose resolution lasts for years and even decades, the WFD provides itself with preventive legislation (ex ante ), with a series of obligations and prohibitions that the so-called “structural” platforms must comply with from the outset if they want to have access to the digital market of the European Union.


In the event that they do not comply with this law, these electronic commerce platforms will have to face astronomical sanctions, which could be 6% and up to 20% of their global turnover. The DMA affects the so-called “gatekeepers”, the guardians or access controllers of these gateways to the digital world that are the platforms. It has been agreed in the DMA that by access controller is meant any platform that, in the last three years, has made an annual turnover of at least 7,500 million euros within the European Union and that its stock market valuation is at least 75,000 million euros. Also, each of them must have at least 45 million monthly end users and 10,000 professional users established in the European Union. In the initial proposal, the bar was set at 6,500 and 75,000 million euros, respectively.

The community law on access to the digital market (DMA) will be complemented by another equally important one, the DSA, which will affect online content and personal data and services and whose final text is being set

In practice, this mainly affects the American Big Tech, known as GAFAM (from Google, Apple, Facebook, Amazon and Microsoft), although now they should be called GAMAM, as Facebook has changed its name to Meta. As expected, the Big Tech have raised the cry for the measure, especially Apple and Google. Apple has complained that the DMA “will create unnecessary privacy and security vulnerabilities for our users, while others will prohibit us from charging for intellectual property in which we have invested heavily,” as reported to various media. Google, for its part, accepts many of the DMA’s premises, in the sense that users should have freedom of choice and to switch platforms, but is concerned that the new legislation could reduce innovation and choice for users. European consumers. Meta, Amazon and Microsoft have not commented at the moment.


In recent months, powerful lobbies in Brussels have worked hard on behalf of the Big Tech to decaffeinate the proposal, even going so far as to try to discredit Thierry Breton, the Commissioner for Industry, with bad arts. Breton is one of the main architects of the legislation now approved last Thursday, at eleven o’clock at night, after eight hours of three-way discussions by senior representatives of the European Parliament, the European Commission and the Council of the European Union, on a text initially presented by the European Commission in December 2020 and revised on May 27.


In the text now approved by the negotiators of the Parliament, the Commission and the European Council, chaired this semester by France, the aim is to ensure that there is fair competition and greater freedom of choice for users in the European Union, as indicated in the statement issued shortly after the agreement. The text will now be reviewed by the lawyers, must be approved by Parliament and will enter into force 20 days after its publication in the Official Journal of the EU. Six months later the law will be effective and must be complied with, foreseeably from the middle of this October.

End the dominance of Big Tech

“The WFD will make it possible to act much faster, because the obligations will be applicable immediately”, congratulated Andreas Schwab, MEP and in charge of directing the three-way negotiation. “The delays [to correct the errors] will be short and strict and the sanctions will be dissuasive,” added Thierry Breton at the press conference held last Friday, which was also attended by Cédric O, French minister for digital transition on behalf of the French Presidency of the Council, and Margrethe Vestager, Competition Commissioner (on the right in the photo below; next to her Schwab, Breton on the far left and O between them).

“The European Union has been forced to approve record sanctions these last ten years against certain nefarious commercial practices to very large players in digital commerce; the WFD will make it possible to directly prohibit these practices and create a more equitable and competitive economic space for new players and European companies”, clarified Cédric O, in an implicit acknowledgment that the current community legislation has not been of much use. “It is an innovative response to past contentions, which may take years to be effective”, added Thierry Breton. The new law is going to structure the digital space for the next twenty years, the Commissioner thinks, and Europe is at the forefront of a global movement to regulate Big Tech.


Cédric O assured that these rules will allow “developing digital markets, reinforcing freedom of choice for consumers, better distributing value in the digital economy and stimulating innovation”. In particular, this legislation wants to ensure that no large online platform that finds itself in the position of “gatekeeper” in front of a large number of users does not abuse this situation to the detriment of companies that also want to compete with their users, added Cédric O, who was acting on behalf of the President of the Council and of France, Emmanuel Macron.

The DMA regulates “ex ante”, in advance; It will be the companies that will have to demonstrate that their conduct is fair and not the regulators, who needed to demonstrate the violation of current antitrust laws.

This legislation modifies the burden of proof, because it will be the companies that will have to demonstrate that their conduct is fair and not the regulators, who until now needed to demonstrate that the current antitrust laws had been violated”, stressed Andreas Schwab. Regarding what restricts innovation, as Apple and sometimes the banking and energy sectors maintain, Cédric O argues that it is the opposite: “The greatest competition is what stimulates innovation and what allows it to advance; This is good news for European innovators and start-ups in general”.


On Friday of last week, coinciding with the visit of the President of the United States to Europe, Joe Biden and the President of the European Commission, Ursula von der Leyen, announced that they had found a way to resolve the conflict regarding personal data transfers. between the United States and Europe. In July 2020, the Court of Justice of the European Union (CJUE) annulled the agreement made, the so-called Privacy Shield, because it considered that it did not guarantee that the data of European citizens that was transmitted to the United States enjoyed the stipulated level of protection. by the European Data Protection Regulation (RGPD).


The main problem is the possible interference of US extraterritorial laws (Patriot Act and Cloud Act) in the fundamental rights of European citizens, when their data is transferred to the United States. According to the announcement made last Friday, the “in principle” agreement allows “to restore trust, offer legal certainty and sustain the digital transformation of billions of companies in Europe and the United States”, according to the general director of BSA, the pressure group of the big software publishers, Victoria Espinel.


However, the text of the agreement has not been made public, so it is not possible to know the new concessions that the United States has made, especially the resources of European citizens regarding the American Cloud Act. If the final text is not fully in accordance with European data protection law, it is more than likely that it will be appealed again and that the Court will agree with the plaintiffs for the third time, say legal sources. When the full text is made public, it will be known whether this “agreement in principle” can be adjusted to European law, they add.

Global movement against Big Tech

The initiative of the European Union against the Big Tech continues to be the forefront of a global movement to confront the digital dominance that is being exercised by the large technology companies around the world, especially those in the United States due to their size. In the United States, Congress has presented several bills and has made the main responsible for the GAMAM testify, and in China severe control measures have also been imposed on their platforms. If the legislation now agreed upon in the European Union proves to be effective, it could be copied in whole or in part from other trade blocs, mainly in the United States.

The large platforms must quickly review their operation within the European Union to adapt to the obligations of the WFD, where users will have many more rights. Specifically, according to the DMA, users will have the right to unsubscribe from the platform’s services under the same conditions in which they have registered. They will not be able to impose their default software and will have to ensure the interoperability of the basic functionalities of their instant messaging services. For example, Apple will not be able to impose the installation of its Safari browser by default and messaging services such as WhatsApp or Facebook Messenger must allow other services to interconnect with them. Now, the services of Meta (Facebook) are not interoperable and the task is very complex, as recognized by the European Commission itself, which must agree on the procedure to be carried out.


Application developers should be allowed equal access to auxiliary smartphone functionalities, such as NFC, and sellers should be given access to their commercial or advertising performance data on the platform. Amazon and Facebook will need to be transparent with their professional users. In addition, among other measures, the European Commission must be informed of the acquisitions and mergers carried out by the gatekeepers.


The DMA provides for a list of prohibitions that affect the monopoly of the platforms, the reuse of data and the contacts that may be exerted on some professional users. Own products or services must be classified in a more favorable way than those of other competitors, as is the case of Amazon’s e-commerce platform, which has a virtual monopoly regime. The personal data collected for a specific provision may not be reused in another service provision, nor may unfair conditions be established for professional users, as well as pre-install software applications or impose their own services. Apple, for example, will have to open its service portal to the competition.


It is, in any case, a first step, because the DMA will be complemented by another equally important law, the DSA, which will affect online content and personal data and services and which is in the process of establishing the final text. Apart from the GAMAM, other groups such as Booking or TikTok may be equally affected. The sanctions in case of non-compliance are very high, which can be up to 10% of the world turnover, and, in case of recidivism, up to 20%. If the company does not comply with this law and breaks the rules at least three times in eight years, the European Commission can open an investigation and impose “structural or behavioral” corrective measures. Member States may also empower their regulatory authorities to investigate possible infringements and report them to the European Commission.