The European Union has announced new regulations aimed at curbing the power of major tech companies in a move it calls the Digital Markets Act (DMA).
These rules target specific “gatekeeper” tech giants: Alphabet, Amazon, Apple, ByteDance, Meta (formerly Facebook), and Microsoft.
Under the DMA, these companies face restrictions and obligations designed to promote competition and prevent unfair practices.
What’s Covered Under DMA?
The DMA identifies 22 core platform services provided by these tech giants. These include popular social networks like TikTok, Facebook, Instagram, and LinkedIn, as well as various online services such as Google Maps, Google Play, Amazon Marketplace, iOS App Store, and more.
The regulation applies when companies have significant market power, with criteria like having over 45 million active local users, a turnover of €7.5 billion+ in recent years, and a market capitalization exceeding €75 billion.
The DMA is designed to address concerns of tech giants abusing their market dominance, limiting competition, and harming innovation.
It prohibits practices like self-preferencing and restrictions on rival app stores. Gatekeepers must also share information generated on their platforms with business users.
Privacy and data protection measures are included, such as requiring user consent for ad targeting.
Enforcement and Penalties
Companies breaching the DMA could face penalties of up to 10% of their global annual turnover, or even 20% for repeated serious offenses.
The European Commission has the authority to impose additional remedies, like requiring divestiture or blocking further acquisitions if systemic non-compliance is identified.
This move challenges the tech giants’ hold on the digital landscape. The DMA aims to open doors for competition, allowing independent app stores, alternative payment services, and new search engines to flourish.
However, it will take time for consumers to shift away from established platforms. Legal challenges from tech companies are also expected as they adapt to the new rules.
The DMA’s effectiveness in reshaping the digital playing field remains to be seen, but it represents a significant step towards creating a fairer and more competitive digital marketplace in Europe.
Enforcement begins in early 2024, with ongoing scrutiny and reviews to ensure compliance.
