Eu’s digital markets act means big problems for big tech. Here’s why

WHAT ARE THE CONSEQUENCES OF BEING IDENTIFIED AS A GATEKEEPER UNDER THE DIGITAL MARKETS ACT? Gatekeepers will carry an extra responsibility to conduct themselves in a way that ensures an

open online environment that is fair for businesses and consumers, and open to innovation by all, by complying with specific obligations laid down in the draft legislation. Under the DMA,

companies identified as gatekeepers will be subject to a number of ‘dos and don’ts’. They will therefore have to proactively implement certain behaviours that make the markets more open and

contestable and at the same time refrain from engaging in unfair behaviour, which is defined in the legislation in the light of market experience to date including from competition cases.

When a company does not yet enjoy an entrenched and durable position, but it is foreseeable that it will in the near future, a proportionate subset of obligations will apply, to ensure that

the gatekeeper concerned does not achieve by unfair means an entrenched and durable position in its operations. WHICH ARE THE TYPES OF CORE PLATFORM SERVICES THAT ARE COVERED BY THE DIGITAL

MARKETS ACT? Ten core platform services will be subject to the DMA: * online intermediation services; * online search engines; * online social networking services; * video-sharing platform

services; * number-independent interpersonal communication services; * operating systems; * cloud computing services; * advertising services; * web browsers; * virtual assistants WHAT ARE

THE ‘DOS AND DON’TS’ FOR GATEKEEPERS? The Digital Markets Act establishes a series of obligations that gatekeepers will need to implement in their daily operations to ensure fair and open

digital markets. This will open up possibilities for companies to contest markets based on the merits of their products and services, and innovate. SOME EXAMPLES OF THE ‘DOS’ IMPOSED ON

GATEKEEPERS INCLUDE THE FOLLOWING: * Allow end users to easily uninstall pre-installed apps or change default settings on operating systems, virtual assistants or web browsers that steer

them to the products and services of the gatekeeper and provide choice screens for key services. SOME EXAMPLE OF THE ‘DON’TS’ IMPOSED ON THE GATEKEEPERS INCLUDE THE FOLLOWING: WHAT IS THE

FINAL DECISION ON FAIR, REASONABLE AND NON-DISCRIMINATORY ACCESS CONDITIONS? IS THE DIGITAL MARKETS ACT CHANGING THE COPYRIGHT RULES? The final agreement ensures an obligation of ensuring

fair, reasonable and non-discriminatory general conditions of access in a targeted manner to app stores, online search engines and online social networking services. The Digital Markets Act

is without prejudice to the Copyright Directive and its transposition in the Member States. The Digital Markets Act will impose an obligation on gatekeepers to design their general access

conditions in a fair, reasonable and non-discriminatory manner and to publish them. Finally, gatekeepers will have to offer an alternative dispute settlement mechanism in case of a

disagreement between the gatekeeper and a business user as regards the application of such general conditions of access. HOW DOES THE DIGITAL MARKETS ACT WORK IN PRACTICE? Once the Digital

Markets Act enters into force, the Commission will first assess whether companies active in core platform services qualify as a ‘gatekeeper’ under the DMA: 1. Companies will have to verify

themselves as to whether they meet the quantitative thresholds included in the DMA to identify gatekeepers. They will then have to provide the Commission with information on this; 2. The

Commission will then designate as ‘gatekeepers’ those companies that meet the thresholds in the DMA based on the information provided by the companies (subject to a possible substantiated

rebuttal) and/or following a market investigation; 3. Within six months after a company is identified as a ‘gatekeeper’, it will have to comply with the ‘dos’ and ‘don’ts’ listed in the DMA.

For those gatekeepers that do not yet enjoy an entrenched and durable position, but are expected to do so in the near future, only those obligations apply that are necessary and appropriate

to ensure that the company does not achieve by unfair means such entrenched and durable position in its operations. WHAT HAPPENS IF A GATEKEEPER IGNORES THE RULES? To ensure the

effectiveness of the new rules, the possibility of sanctions for non-compliance with the prohibitions and obligations is foreseen. If a gatekeeper does not comply with the rules, the

Commission can impose fines of up to 10% of the company’s total worldwide annual turnover or 20% in the event of repeated infringements and periodic penalty payments of up to 5% of the

company’s total worldwide daily turnover. In case of systematic infringements the Commission can impose additional remedies. Where necessary to achieve compliance, and where no alternative

exists, equally effective measures are available; these can include structural remedies, such as obliging a gatekeeper to sell a business, or parts of it (i.e. selling units, assets,

intellectual property rights or brands), or banning a gatekeeper from acquiring any company that provides services in the digital sector or services enabling the collection of data affected

by the systematic non-compliance. WHAT IS THE PURPOSE OF MARKET INVESTIGATIONS UNDER THE DIGITAL MARKETS ACT? To ensure that the new gatekeeper rules keep up with the fast pace of digital

markets, the Commission will have the power to carry out market investigations. The purpose of market investigations is three-fold: 1. Identifying gatekeepers that are not captured by the

quantitative thresholds foreseen in the Digital Markets Act, or which meet these thresholds but have presented a substantiated submission rebutting the presumption based on these thresholds;

2. Identifying whether other services within the digital sector should be added to the list of core platform services falling within the scope of the Regulation, or whether new practices

appear, which risk having the same detrimental effects as those already covered; 3. Designing additional remedies for when a gatekeeper has systematically infringed the rules of the Digital

Markets Act. WHO WILL ENFORCE THE DIGITAL MARKETS ACT? The Commission will be the sole enforcer of the rules laid down in the Digital Markets Act. This centralised enforcement matches the

inherently cross-border activities of the gatekeepers and the objective of the DMA to establish a harmonised framework with maximum legal certainty for businesses across the entirety of the

European Union. At the same time, as a part of the supervisory architecture of the Digital Markets Act, the Commission will cooperate and coordinate closely with competition authorities and

courts in the EU Member States. The final agreement also envisages that where such competence is provided under the national law, the relevant national authorities may conduct investigatory

steps to determine non-compliance of the gatekeeper with the Digital Markets Act and report on their findings to the Commission. This makes use of the strength and expertise of the relevant

authorities across the European Union and will ensure a maximum level of compliance. WILL PRIVATE DAMAGES BE AVAILABLE TO THOSE HARMED BY GATEKEEPER CONDUCT? The DMA is a Regulation,

containing precise obligations and prohibitions for the gatekeepers in scope, which can be enforced directly in national courts. This will facilitate direct actions for damages by those

harmed by the conduct of non-complying gatekeepers. WHEN WILL THE RULES BECOME APPLICABLE? Once formally adopted, the Act, which takes the legal form of a Regulation, will enter into force

20 days after publication in the EU Official Journal and will apply six months later. The designated gatekeepers will have a maximum of six months after the designation decision by the

Commission to ensure compliance with the obligations laid down in the Digital Markets Act. WHEN WILL THE COMMISSION DESIGNATE THE FIRST GATEKEEPERS? The DMA will start to apply six months

after it enters into force. Once it starts applying, any company that meets the quantitative thresholds for identifying a presumed gatekeeper will have two months to notify those

quantitative thresholds to the Commission. The Commission will have 45 working days to adopt a decision designating such company as a gatekeeper for each of its relevant core platform

services that meet the quantitative thresholds individually. In limited and exceptional circumstances where the company concerned rebuts the presumption of this gatekeeper status with

sufficiently substantiated arguments manifestly putting into question the presumption, the Commission would have five months to assess the matter and to adopt its decision on whether or not

to designate the company concerned as a gatekeeper. _This article was originally published in the World Economic Forum. _ ------------------------- _ALSO READ: U.N. talks not ready to agree

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