In December 2020, the European Commission introduced the Digital Markets Act (DMA) to ultimately limit the market power of Internet companies Google, Amazon, Facebook, Apple and Microsoft. Late Thursday evening, the European Parliament and the Council of Ministers agreed on the final version – in record time. What does this mean for Big Tech and consumers? Here are answers to the most important questions about the new obstacles in the fight against market abuse and texting from Threema to Whatsapp:
Why does the EU need a Digital Markets Act at all?
Big Internet companies, mainly the five US companies Google, Amazon, Facebook, Apple and Microsoft, now not only control their core markets, but also use the control of their platforms to reach new markets and thus build entire ecosystems to which users are effectively enslaved. A good example of this is the case of “Google Shopping”: Google systematically placed its price comparison portal Shopping in its own search engine, put competitors at a disadvantage, and thus “appropriated” the price comparison market. This is what the DMA aims to prevent in the future.
Don’t we have competition law for that?
So far, the European Commission has actually taken action against companies “ex post”, ie after finding violations of competition law. The problem is that such processes – Google Shopping are also a good example of this – take years, if not more than a decade. In a dynamic market such as the Internet, it is long too late for competition. The DMA therefore gives the Commission an instrument to act ‘ex ante’, ie before harm is done.
What exactly does DMA do?
The EU therefore prohibits the companies concerned by a number of very specific types of behavior. There is a kind of “blacklist” with strict bans in Article 5 and a somewhat vague “gray list” in Article 6. Almost 20 types of behavior are mainly based on cartel cases in the last few years. This includes, for example, a ban on preference for your own services, as is the case with Google Shopping. Online companies can no longer tie their business customers to their own app store, as Apple is blamed for, or how Amazon uses data from product vendors in their market to then compete with them. As old cases are concerned, new anti-competitive practices are obviously not taken into account. However, the Commission should be able to extend the articles.