Digital Market Act provisional agreement – End of the Tech Giants’ Wild West

European legislators have agreed on sweeping new legislation to rein in the market power of Tech Giants, such as Amazon. Yesterday (24 March 2022), a provisional agreement between Commission, Council and European Parliament on the Digital Markets Act was reached.

“This is a major step. Governments will be able to truly challenge the manipulations of Big Tech. The free-for-all that tech giants have benefited from until now has had a devastating impact for working people,” said Oliver Roethig, Regional Secretary of UNI Europa.

“Take Amazon: as well as expanding its market share in commerce, it has also expanded its conflictual labour approach which undermines core aspects of the European Social Model. It has used its sway to distort the market to its advantage. This has resulted in taking market share from companies with established labour relations where workers have a strong say over the decisions that impact their lives. It has then imposed its approach of dodging negotiations wherever it can get away with it.

“Governments are establishing the tools to hold these corporations accountable. Many of these big players like Amazon are getting big amounts in government money. As well as applying this regulation, the EU and governments should also use their buying power to make companies behave,” said Oliver Roethig, echoing the motivation behind UNI Europa’s extensive input to this legislative package.

The provisional agreement on the Digital Markets Act

Some large online platforms act as “gatekeepers” in digital markets. Gatekeepers are large online platforms that have a strong and entrenched economic position and thereby a significant impact on the internal market. They also have a strong “intermediation position”, meaning that it links a large user base to a large number of businesses.

This classification as gatekeepers recognizes that, by determining people’s access to information, goods and services, these corporations have a huge influence in our societies. The Digital Markets Act (DMA) aims to ensure that these platforms do not use this influence to warp things like public opinion or markets to their advantage. That is why the Digital Markets Act is such an important piece of legislation.

“A fair marketplace is part of every democracy,” said Commissioner Margrethe Vestager during the press conference (09:01).“It used to be the Wild West, this is no longer the case. We are taking back control. We as politicians have said to them, yes you are welcome here in our internal market but you must follow our rules,” added Commissioner Thierry Breton (9:04).

The DMA would affect tech giants like Google, Amazon, Facebook, Apple and Microsoft. The scope is companies with a market value of €75 billion ($82.4 billion) or €7.5 billion ($8.26 billion) in annual revenue within the EU, and at least 45 million monthly end-users and 10,000 yearly business users of at least one core platform.

The provision agreement on the Digital Markets Act (DMA) includes among other things:

• A new interoperability obligation between messaging services
• Ban on data collection for the purpose of advertising unless there is effective consent
• Changes to the governance structure: e.g. a bigger involvement of national competition authorities in the investigative parts
• A greater role has been give to third parties and possible action in cases of non-compliance have been widened.
• The possibility of a merger ban has been added in this process
• If there are systematic infringements the governments would have the option of splitting up the activities on the internal market

The original list of digital services contained intermediating services, online advertising, search engines, social media, video-sharing platforms, messaging services and operating systems. Upon insistence from MEPs, web browsers and virtual assistants were added.

In an age where tech giants’ revenue far exceeds some countries’ GDP, this law takes sanctioning seriously, it will apply fines of up to 10 percent of a company’s global annual sales for a first offense and up to 20 percent for repeat infringements.

In practical terms

The DMA means:

• Tech giants will be prevented from ‘bundling’, linking services together in a single package. Moreover, gatekeepers will be forbidden from combining data from different services, for instance, Facebook and Instagram, unless they obtain the user’s explicit consent;
• Amazon will be barred from using data collected from outside sellers on its services to offer competing products;
• Across tech giants, social media, app stores and search engines, in particular, will need to apply fair, reasonable and non-discriminatory conditions to other companies; 
• Google, Meta (Facebook) and Instagram, will no longer be able to offer targeted ads across multiple platforms — using data gathered as users move between services owned by the same company;
• Apple, for example, will have to allow alternatives to its App Store for downloading apps and allow payment methods for the App Store other than Apple’s own.

The DMA is a fair instrument to tackle unfair market powers. For more information: see UNI Europa’s report on Politico: Accounting for Workers’ Rights When Regulating Amazon & Other Giants, as well as the language on Big Tech companies in its Emergency Motion.

The next steps

The legislation will take effect next year. After the legal text is finalised at technical level and checked by lawyer-linguists, it will need to be approved by both Parliament and Council. Once this process is completed, it will come into force 20 days after its publication in the EU Official Journal and the rules will apply six months after.