Negotiators from the European Parliament and the Council of the EU managed to reach an agreement, late in the evening on Thursday 24 March, on the Digital Markets Act (DMA) (see EUROPE 12918/25). However, we had to wait until the morning of 25 Friday to find out more about the content of the provisional Interinstitutional Agreement.
“With the DMA, we’re taking back control. We say to the big platforms ‘we are political authorities, you are welcome, but here are our rules’”, the Commissioner for the Internal Market, Thierry Breton, told a press conference on Friday morning.
In concrete terms, the provisional agreement resulting from this fourth round of interinstitutional negotiations sets, as indicated in our previous EUROPE edition, the thresholds for designating a company as a gatekeeper at €7.5 billion in annual EU turnover over the last three years or €75 billion in market capitalisation.
“If you take the Stock 50 index, you take the top half of that index, these are very important companies for Europe and that’s pretty much how you characterise the threshold”, Mr Breton summarised.
In addition, to be designated as gatekeepers, the companies concerned must also provide certain services in at least three Member States and to at least 45 million monthly end-users in the EU and 10,000 annual business users.
These services include messaging, social media, marketplaces, cloud services, application shops, search engines, browsers, advertising services and voice assistants.
“Within six months of their appointment, gatekeepers will have to comply with their new obligations”, said Thierry Breton.
Part of the agreement includes the notion of an ‘emerging gatekeeper’, allowing the Commission to impose certain obligations on companies whose competitive position is proven but not yet sustainable.
SMEs, on the other hand, will be exempted from the obligation to be identified as gatekeepers, except in “exceptional” cases.
Interoperability and potential heavy fines
Once designated, gatekeepers will no longer be able to force application developers to use certain services, such as payment or identity provision, in order to appear in application shops.
They will no longer be able to promote their own products, nor will they be able to reuse private data collected through another service. In addition, gatekeepers will also have to inform the European Commission of any ongoing or future business acquisitions or mergers.
There are also provisions for users to easily unsubscribe from services.
The issue of interoperability, which is dear to the European Parliament, was also discussed during the trilogue. On this issue, the co-legislators agreed that the largest messaging services, such as Whatsapp, Facebook Messenger or iMessage, will have to open up and interact with smaller messaging platforms, “if they request it”.
“Our victory on interoperability is a crucial blow against dependence on data-hungry, consumer-hostile 'Whatsapp'”, said Patrick Breyer (Greens/EFA, Germany). He added: “For the first time, users will be able to switch to privacy-friendly alternative messengers and still stay in touch with their contacts who stick to Whatsapp”.
The interoperability of social networks will be assessed in the future.
The provisional agreement also covers targeted advertising, which was another important issue for the Parliament. The compromise on this issue is that the combination of personal data for targeted advertising purposes is only allowed with the user’s consent.
In terms of sanctions, the provisional agreement provides that gatekeepers may be fined up to 10% of their annual worldwide turnover. Fines could be as high as 20% of global turnover for repeat offenders.
“With the DMA, we will prevent rather than cure. From now on, companies will no longer have to engage in lengthy and costly legal proceedings to fight the anti-competitive practices of digital giants”, commented Stéphanie Yon-Courtin (Renew Europe, France).
A cooler reception on the other side of the Atlantic
In the wake of the announcement of the agreement, a multitude of entities involved in the DMA reacted.
For Ursula Pachl, Deputy Director General of the European Consumers Organisation (BEUC), this is “a great moment for consumers and businesses, who have suffered from the harmful practices of big business”.
From the European Digital Rights (EDRi) side, Policy Officer Diego Naranjo said that the DMA, “if properly implemented”, “will empower individuals to choose more freely the kind of online experience and society we want to build in the digital age”.
For the US Chamber of Commerce, on the other hand, this agreement leaves a bitter taste in the mouth for now. “Although the details are still emerging, we are disappointed that the EU has chosen to target a handful of predominantly US companies with the DMA. A policy of de facto discrimination against US-based companies threatens to undermine transatlantic cooperation”, said the institution’s vice president and head of international affairs, Myron Brilliant. (Original version in French by Thomas Mangin)