On the evening of March 24, the European Parliament, the European Council and the European Commission agreed on the Digital Markets Act, laying the groundwork for the entry into force of this competition regulation against the global tech giant.
According to Nandu reporters, if the provisions of the above bill are violated, the "gatekeeper" enterprise will be subject to huge fines and even face the risk of splitting. This may reshape the business models of large American technology companies represented by Google, Apple, Amazon, and Meta (formerly Facebook).
Statement issued by the European Commission on March 25.
"We are a big step closer to achieving fair, open and competitive digital markets." On March 25, Margrethe Vestager, the EU's executive vice-president and head of competition, said in a statement that large "gatekeeper" platforms have prevented businesses and consumers from benefiting from the competitive digital marketplace and that they must now comply with a clear set of obligations and bans.
She said the Digital Marketplace Act (DMA) and Digital Services Act (DSA) would be published after the vote was passed, taking effect "sometime in October," she said.
According to Nandu reporters, in December 2020, the European Commission proposed two blockbuster digital regulatory drafts - the Digital Market Act and the Digital Services Act. This is an important european adaptation to the digital age, aiming to ensure a safe, level playing field online environment.
Among them, the Digital Services Act focuses on strengthening the responsibility of platform information processing and other aspects, requiring platforms to build a corresponding mechanism to combat illegal content; if it violates the regulations, it will face a penalty of 6% of global sales in the previous fiscal year. In January this year, the European Parliament voted to pass the Digital Services Act, which was subsequently submitted to the EU member states for consideration and implemented after being approved by various countries.
The Digital Market Act, which applies to "gatekeeper" companies, is identified by criteria such as having a market capitalisation of at least €75 billion in the past three years, an annual turnover of more than €7.5 billion in the European Union, at least 45 million monthly active users and more than 10,000 business users, and the provision of core platform services in at least three European countries.
Once the bill is passed, tech giants that play the role of "gatekeepers" in key service markets such as online advertising, operating systems, online search, cloud services, etc., will be restricted and more obligated. These include not practicing self-favoritism, enabling interoperability, and restricting "killer acquisitions."
The potential impact of this new rule on the giants is worth noting. In the case of the four major U.S. technology companies, Apple and Google's "walled garden" in the App Store may be further loosened, allowing app developers to use other payment systems; Amazon will be banned from using data collected from external sellers in its services to prevent the e-commerce giant from "acting as both referees and athletes"; Meta and Google, which dominate the online advertising market, will also be restricted from providing personalized ads based on users' personal information without consent.
If the "gatekeeper" company violates the DMA regulations, the European Commission can impose a fine of up to 10% of the global turnover in the previous year; if the regulations are violated again, the penalty will be increased to 20%. According to the draft, the "gatekeeper" company violates the rules at least 3 times in 8 years, and the European Commission can conduct market research and take behavioral or structural remedies, including splitting if necessary.
"No company in the world will turn a blind eye to fines of up to 20 percent of its global turnover." Thierry Breton, the EU's commissioner for the internal market, said the "gatekeeper" companies would be identified according to objective criteria and ensured that they were quick to meet their new obligations. Through effective implementation, the new regulations will bring more fair and competitive conditions to enterprises and consumers, and bring more innovation and choice to the market.
According to the European Commission statement, the DMA bill has not yet been fully adopted, still needs to be approved by the European Council and the European Parliament, and will enter into force after a series of procedures.
The European Union reached an interim agreement on the digital market law, and Vestager issued a statement.
"For companies that play the role of 'gatekeeper', now the DMA will set the rules of the game," Vestager said in a statement released on the 25th, as the competition commissioner, she has received many complaints, involving Google, Amazon, Apple and Meta.
"We've seen what might happen in the market ... What we have learned over the years is that we can correct and punish violations in specific situations. But when things get systematized, we also need regulation. If there is systemic misconduct, we need to step in to regulate – without enforcement, there will be no real change. ”
She compared DMA to competition regulation in industries such as banking, telecommunications, energy, and transportation, saying that some companies play a special role in the digital market and need to be strengthened. This is also something that many jurisdictions around the world are already aware of.
For the introduction of the DMA, the US technology giants expressed concern. An Apple spokesperson told the media that some of the DMA's rules could create unnecessary privacy and security loopholes for Apple users and would also prohibit the company from charging fees for heavily invested intellectual property. Google said it feared some rules would reduce innovation and choice in Europe. Amazon said it was reviewing what the new rules meant to customers.
Written by: Nandu reporter Li Ling