Digital Economy

Countdown for Big Tech – Digital Markets Act published today

Today – 12 October 2022 – saw the publication of the Digital Markets Act (“DMA”) in the Official Journal of the European Union (see here). This seminal piece of legislation is one of the first initiatives worldwide to comprehensively regulate the gatekeeper power of the largest digital platforms. As we have laid out in more detail here when commenting on one of the earlier versions of the law, the new Regulation allows the Commission to designate digital companies as “gatekeepers” on the basis of specific turnover, market value and user thresholds. In its designation decision, the Commission will identify these gatekeepers’ core platform services that will be required to comply with a broad set of self-enforcing obligations regarding - among others - data access, interoperability, as well as several prohibitions and restrictions, e.g. concerning self-preferencing and the use of personal data for targeted advertising.

The DMA is going to enter into force on the twentieth day following its publication, i.e. on 1 November 2022, and will apply from 2 May 2023. The latter date is especially important, because it entails that all businesses providing core platform services and meeting the quantitative criteria for designation as ‘gatekeepers’ (Article 3(2)) have to notify the Commission of their potential gatekeeper status and the relevant core platform services without delay and in any event within 2 months, i.e. by 3 July 2023, at the latest. A gatekeeper’s failure to notify can lead to the imposition of fines of up to 1 % of total global turnover in the last financial year. 

The next steps will unfold relatively briskly: the Commission is required to designate undertakings meeting the applicable criteria as ‘gatekeepers’ within just 45 working days of submitting a complete notification (Article 3(4)). Consequently, the Commission’s first gatekeeper designation decisions – specifying the relevant core platform services to which the prohibitions and obligations in Article 5-7 DMA will apply – may be issued as early as in August 2023. The relevant core platform services will then have to fully comply with the new prohibitions and obligations within a strict deadline of 6 months after the adoption of the designation decision (Article 3(10)), i.e. potentially from early 2024 onwards. 

This tight time frame will constitute a huge challenge not only for gatekeeper candidates, but first and foremost also for DG COMP and DG CNECT, the Commission services tasked with applying and enforcing the DMA. And because failure to comply with the gatekeeper obligations and prohibitions can lead to the imposition of severe fines of up to 10 % of worldwide total turnover (and even up to 20 % of total worldwide turnover in case of repeated infringements), gatekeeper candidates are well-advised to reach out to the Commission now in order to avoid non-compliance. It is very likely that the most obvious gatekeeper candidates have already done so.

The DMA also bears opportunities for businesses that are using platform services of potential gatekeepers. Not only will business users of platforms be able to complain to the Commission in case of potential violations, but they will also have the ability to enforce the new gatekeeper obligations themselves by bringing private claims before national courts. Should the 11th amendment to the German Competition Act be enacted as proposed (see here), German courts may become attractive venues for such private enforcement litigation.