INTRODUCTION
The Digital Markets Act (“DMA”) that is set to be enforced in the European Union, comes within the ambit of the antitrust laws. Antitrust laws are a set of laws that seek to ensure that businesses operate and compete fairly. These laws prevent businesses from forming monopolies to dictate the price in the market. They ensure that consumers receive high quality goods and services, lower prices, varied choices and innovation.[1] Therefore, Antitrust laws prevent companies from abusing power and give scope for small companies to rise in the marketplace.
This essay delves into the intricacies of the proposed Digital Markets Act and focuses on what the implementation of this act would mean for the consumers, the Big-Tech companies and the world economy at large.
ABOUT THE DIGITAL MARKETS ACT (“DMA”)
The Digital Markets Act is one-of-a-kind European Union law that aims to make the digital sector market, an even playing field for all companies. It was initially introduced in the European Commission on 15th December, 2022. It was then adopted by the European Parliament on the 14th of September 2022 and entered into force on 1 November 2022. However, it only became applicable on 2nd May 2023. Two months after the application of the act, companies had to notify the Commission if they fit into the quantitative thresholds of Act along with providing relevant information. Forty-five days after the notification, the Commission would decide whether the company is a designated “gatekeeper”. Six months after the designation, the gatekeepers would have to ensure compliance with obligations and the prohibitions of the DMA.[2] Therefore, the gatekeepers had to comply with the obligations elucidated in the DMA by the 6th of March, 2024, which is why it becomes pertinent to understand the law and the implications of the law.
WHAT COMPANIES QUALIFY AS “GATEKEEPERS”?
According to the European Commission, “gatekeepers” are those large digital platforms that provide core services such as messenger services, online search engines, and app stores. Therefore, these companies provide ‘core platform services’. On 6th September, 2023, the European Commission designated six gatekeepers, namely; Apple, Alphabet, Amazon, ByteDance, Meta and Microsoft.[3]
The following are recognized as the salient features of the “gatekeepers”:
- Having a dominant economic position in the global market with an impact on the market of the EU,
- Hold a strong intermediate position, i.e. They link the users of the platform to business,
- The position of these companies has been stable and undisturbed for a considerable period of time.
BENEFITS POSED BY THE DIGITAL MARKETS ACT (“DMA” )
Primarily, the DMA aims on curbing the gatekeepers from forcing the consumers to use only their platform and makes it difficult for these companies to capitalize by tracking the users’ data and activities. This would ensure that internet is a fairer and safer place. Essentially, the DMA sets out to the following:
- Making the digital markets a fairer business environment for the businesses which depend upon the gatekeepers to offer the services,
- Consumers will have a plethora of services to choose from with direct and fairer prices,
- Start-ups in technology and innovation can compete in the online platform environment without having to comply with the unfair terms and conditions that limit their development,
- Gatekeepers will not be allowed to use unfair practices in order to gain an unfair advantage.
CRITICISMS OF THE DIGITAL MARKETS ACT (“DMA”)
One of the major contentions of the critics is that the DMA takes away the incentive of the innovators thus, hampering the quality of the goods and services. Secondly, critics also claim that since the law is so broad, it could have a retrospective effect and reduce the competition, something that happened with the EU’s General Data Protection Regulation (GDPR).[4]Thirdly, it is believed that the implementation of the DMA is a costly affair, not just for the states but also for the gatekeepers.
Lastly, in an economic sense, since these Big Tech companies have widely held stocks in the world, regulating them would affect ordinary people.
PUNISHMENTS UNDER THE DIGITAL MARKETS ACT(“DMA”)
In case of non-obligation of the gatekeepers, the consumers can inform the Commission or the National Competition Authority about the platform’s unfair actions, or can take legal action in front of the national court in the European Union.
The DMA puts in place stringent fines in case of non-compliance. The DMA fines the offender up to 10 percent of the worldwide revenue and 20 percent in the case of repeated infringements. In case of necessary situations, further action might be taken by banning the offender from making further acquisitions or forcing it to offload parts of its business.
CONCLUSION
It is not the first time; the EU has taken a hard stance on the Big Tech companies. The Digital Markets Act (“DMA”) targets gatekeepers and imposes obligations to ensure a level playing field. This act seeks to create an environment which ensures that innovation thrives, consumers have diverse choices and monopolistic practices are curtailed. However, amidst the noble intentions, criticisms surrounding the potential impact on innovation incentives, retrospective effects, implementation costs and broader economic implications cannot be overlooked. Therefore, it is imperative for both the regulators and gatekeepers to prudently navigate the rough terrain of this complex regulation. It is pertinent to strike a balance between innovation and consumer interests to realize the full potential of the DMA while mitigating its unintended consequences.
Author(s) Name: Riya Kulkarni (Government Law College, Mumbai)
Reference(s):
[1]Alexandra Twin, ‘Antitrust Laws: What They Are, How They Work, Major Examples’ (Investopedia, 31st January, 2023)
<https://www.investopedia.com/terms/a/antitrust.asp>Accessed on 24th April, 2024
[2]‘About the Digital Markets Act’ (European Commission)
<https://digital-markets-act.ec.europa.eu/about-dma_en> Accessed on 24th April, 2024
[3]‘The Digital Markets Act: ensuring fair and open digital markets’ (European Commission)
<https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en> Accessed on 24th April, 2024
[4] Carmelo Cennamo and D. Daniel Sokol, ‘Can the EU Regulate Platforms Without Stifling Innovations?’ (Harvard Business Review, 1st March, 2021) <https://hbr.org/2021/03/can-the-eu-regulate-platforms-without-stifling-innovation> Accessed on 24th April, 2024
