MEPs take on social media giants with Digital Markets Act rules

The EP’s internal market and consumer protection committee (IMCO) has adopted the DMA proposal setting out rules for which ‘gatekeeper status’ companies can and cannot do in the EU.

German MEP and rapporteur Andreas Schwab (EPP) said it was clear that competition rules alone cannot address all the problems citizens face with tech giants and their ability to set the rules by engaging in unfair business practices. “The Digital Markets Act will rule out these practices, sending a strong signal to all consumers and businesses in the Single Market: rules are set by the co-legislators, not private companies!” Schwab said.

The DMA designates a company as a “gatekeeper” providing so-called “core platform services” such as online intermediation services, social networks, search engines, operating systems, online advertising services, cloud computing, and video-sharing services. The status can also extend to web browsers, virtual assistants and connected TV.

“Currently, a few large platforms and tech players prevent alternative business models from emerging – including those of small and medium-sized companies. Often, users cannot choose freely between different services. With the Digital Markets Act, the EU is putting an end to the absolute market dominance of big online platforms in the EU,” said German MEP Anna Cavazzini (Greens).

MEPs amended the European Commission’s original proposal increasing the quantitative thresholds for a company to fall under the scope of the DMA to €8 billion in annual turnover in Europe, a market capitalization of €80 billion.

The technical criteria to qualify as a gatekeeper would be any company that provides a core platform service in at least three EU countries and has at least 45 million monthly end-users, as well as over 10,000 business users. But these thresholds do not prevent the Commission itself from designating other companies as gatekeepers when they meet certain conditions.

The DMA includes rules for data protection and targeted advertising, meaning gatekeepers will have to refrain from imposing unfair conditions on businesses and consumers, except for cases where there is “clear, explicit, renewed, informed consent”.

Specifically personal data of minors shall not be processed for commercial purposes, such as direct marketing, profiling and behaviourally targeted advertising.

MEPs want the Commission to impose “structural or behavioural remedies” on large gatekeeper companies that have systematically failed to comply with regulations, such as preventing them from making acquisitions of other DMA companies, to prevent further damage to the internal market.

Another proposal is setting up a “European High-Level Group of Digital Regulators” to improve cooperation and coordination between the Commission and member states in their enforcement decisions. This helps to clarify the role of national authorities and leaves enforcement of the DMA to the Commission.

MEPs from IMCO proposed that the DMA ensures whistleblower protection so they can alert competent authorities to actual or potential infringements of this regulation while being shielded from retaliation. In the case that a gatekeeper does not comply with the rules, the Commission can impose fines of “not less than 4% and not exceeding 20%” of its total worldwide turnover in the preceding financial year-MEPs.

The next step is for this proposal adopted by IMCO to be voted on by the parliament in December, assuming it passes negotiations with EU governments are planned to start under the French presidency of the Council in the first semester of 2022.