May 27, 2022

Late Thursday, the European Union agreed on the details of a comprehensive competition reform under which the most powerful intermediate technology platforms would be subject to a set of preliminary rules on how they can and cannot operate: 10% of global annual sales, with the risk of fines if they violate the requirements. (or even 20% for repeated violations).

In three negotiations between the European Council, Parliament and the Commission, which lasted about eight hours today, it was finally agreed that the Digital Markets Act (DMA) will apply to large companies that provide “primary platform services” such as social networks or search engine – with a market capitalization of at least 75 billion euros or an annual turnover of 7.5 billion euros.

To qualify as so-called “gatekeepers” and thus fall under the DMA, companies must have at least 45 million end users per month in the EU and over 10,000 business users per year.

This clearly limits the ability of American tech giants, including Apple, Google and Meta (Facebook). While some smaller but still major domestic European technology platforms, such as music streaming platform Spotify, are avoiding the current regime. (Although other European platforms may already have—or have achieved—scales within limits.)

SMEs are generally excluded from designated gatekeepers because DMAs are reserved for large technologies.

This regulation has been in development for years – and it will be the beginning of a radically different former regime for the most powerful technology platforms, after the fact that some of the behemoths have so far been able to move en masse without having a single Ic. Obvious effect on market share.

Frustration over EU competition and enforcement investigations into tech giants like Google, as well as widespread concerns about the need to restart digital markets and restore prospects for active competition, are key factors for bloc lawmakers.

Andreas Schwab, European Parliament spokesman for the dossier, said in a statement: “The agreement marks the beginning of a new era of technical regulation worldwide. The Digital Markets Act ended the ever-increasing dominance of big tech companies. From now on, they must show that they also provide fair competition on the Internet. The new rules help preserve this basic principle. In this way, Europe provides more competition, more innovation and more choice for users.”

In another statement of support, Cédric Oh, the French minister of state in charge of digital, said: “Over the past 10 years, the EU has been forced to impose record fines for some harmful business practices by very large digital players. The DMA will outright ban this practice and create a fairer and more competitive economic space for new entrants and European companies. These rules are needed to encourage and open up digital markets, expand consumer choice, better distribute value, and encourage innovation in the digital economy. The European Union is the first country to take such decisive action in this regard, and I hope that other countries will soon join us.”

Key requirements agreed by EU lawmakers include interoperability of messaging platforms, meaning that small platforms can ask large gatekeepers to open on demand and allow their users to exchange messages, send files, or allow video calls. Typical network effects of social platforms that create an innovative terrible connection to the service.

This could be extremely important in order to allow consumers who object to the policies of giants like Meta, which owns Facebook Messenger and WhatsApp, to switch to a competitor because their social cards are actually provided to them by Gatekeeper. Possibility to send a message to your friends.

There has been some debate about whether the trilogy would survive message interactivity. That is, although group messaging interactivity will be offered for a longer period than one-on-one messaging interactivity.

Speaking with gaming-updates ahead of today’s fourth and final test, Schwab stressed the importance of interoperability in messaging.

“It was always clear to Parliament that messaging interoperability had to come,” he told us. “He will come – plus he must be safe. If telecom regulators say they can’t provide end-to-end encrypted group chats within nine months, it will no doubt come sooner.

Messaging services will need to open their APIs to competitors to allow interoperable messaging for core functionality, as long as interoperability requirements are met, Schwab said — with the requirement intentionally asymmetric, meaning smaller messaging services are not subject to DMA. . Not open to gatekeepers, but can connect to Big Tech itself.

“The first basic messaging features are peer-to-peer messaging, video and voice calls, and basic file transfer (photos, videos), and more features like group chats will follow over time,” Schwab said. “Everything must be end-to-end encrypted.”

Interoperability for social media is on hold for now – fellow EU lawmakers agree that such provisions will be reviewed in the future.

In another major decision that could have major implications for the leading digital business model, PArliament was able to keep the changes in the previous version of the offer, which means that the gatekeeper needs the explicit consent of the user to combine personal data for targeted advertising.

“Sorting and cross-using data is only possible with explicit permission,” Schwab said. “This is especially true for advertising purposes, as well as for combining data from third parties (for example, Facebook with third parties). This means users have more control over whether they want to be tracked across devices/services, even outside the Big Tech network (hence third-party data), and whether they want to receive tracking ads.

“Finally, to avoid consent fatigue, the gatekeeper of parliament can ask for consent again: once a year if you refuse or withdraw consent to these practices. This was very important to me – otherwise the permission would make sense if the gatekeeper could spam users if they didn’t let them in.”

Another parliamentary requirement that has withstood the negotiations for the trilogy is the provision that users should be able to freely choose their browser, virtual assistant or search engine when such a service is controlled by a gatekeeper. In these areas, new standards apply for accessible platforms.

While email — another oft-recurring option that European end-to-end encrypted email service ProtonMail says should also get an options screen — is not included, lawmakers have limited it to “basic software,” the council said.

Other obligations of gatekeepers in the agreed text include the following requirements:

  • Ensure that users have the right to opt out of Core Platform Services under the same subscription terms.
  • Give app developers intelligent access to additional smartphone features (such as the NFC chip).
  • Give merchants access to your marketing or advertising performance data on the Platform.
  • Notify the European Commission of your acquisitions and mergers

And sanctions include provisions that prevent gatekeepers from:

  • Prioritize your own products or services over others (also known as limiting personal preference)
  • Reuse of personal data collected during one service for the purposes of another service
  • Create unfair conditions for business users
  • Pre-install certain software applications
  • Requires app developers to use certain services (such as payment processors or identity providers) to be listed in the App Store.

The Commission will be solely responsible for enforcing DMA and will have some leeway, whether it be immediate action against tech giants in breach of duty, with text to ensure dialogue with regulators. Ensures gatekeepers have a clear understanding of the rules (i.e. imposition of heavy fines).

Today’s DMA introductory text agreement is the latest milestone in a decades-long journey to turn the DMA proposal into law. But there are still some hurdles that European lawmakers need to overcome.

It is still awaiting the approval of the final legislative text by Parliament and the Council (but it is generally more difficult to reach consensus from the outset). Then, after this final vote, the text will be published during the official visit of the EU and the regulation will enter into force in 20 days, and Member States have six months to incorporate it into national legislation.

A number of European Commissioners will no doubt hold a briefing tomorrow to work out the details of what has been agreed, so stay tuned for further analysis…

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