Europe steps on the accelerator with a law as ambitious as it is difficult to apply

  • 51

The Digital Markets Law (DMA) is called to change the technology sector. A directive so ambitious by the European Union that its implications directly threaten the foundations of companies like Google, Amazon, Meta, Microsoft and the so-called technological “guardians”. Those giants, most of them American, that control through their services how users access the internet and the different applications.

It has been more than a year of negotiations but finally we already know the main lines of how the European Union wants to regulate the technology sector. Here we explain what this new directive consists of, what its main points are and when it is intended to start operating.

Who are the “guardians”. The concept of ‘gatekeeper’ or ‘guardian’ is essential to understand the operation of the DMA. Mainly because being included in this category will imply a series of additional requirements and obligations. Among those included are the big tech companies we all know: Google, Amazon, Meta, Apple, and Microsoft. But the door is left open for others to be included.

The point has been established at 7,500 million annual volume or a capitalization of at least 75,000 million euros. In addition, they must also have at least 45 million monthly users in Europe or 10,000 commercial users per year. All the companies named more than meet these requirements, but in the future European technology companies such as Booking, Zalando, SAP or Spotify could also fit in. Asian giants such as Alibaba or Byte Dance could also end up exceeding these numbers and be classified as guardians.

Obligations for service companies, not devices. If you look closely, companies like Samsung or Sony are not included, because the DMA is about users and services, not about hardware. In fact, there is a list of types of digital services included: intermediation, online advertising, search engines, social networks, video sharing platforms, messaging services, operating systems, web browsers and virtual assistants.

Interoperability comes by law. It is perhaps the easiest proposal to appreciate by the end user. The European Union will force these technological giants to facilitate the interoperability of their applications. That is, for example iMessage should work on Android and sending a message from Signal to WhatsApp should be possible. It will be necessary to see how it is done, since this is a radical paradigm shift, but the intention is that the “guardians” bet on open protocols and stop excluding each other. What we now have with the Matter standard for IoT, but applied to messaging apps. Quite a technical challenge at the encryption level, as we have already seen with Facebook and Messenger, which will have to be seen how it ends up being implemented.

Users will be able to send messages, images, videos and make calls between the applications of different companies. Group chats are also included, although in this case they will have up to three years to guarantee encryption, they say from Euactiv.

Remove pre-installed applications and prohibited from including services by default. In some way, we can understand the DMA as the law where some of the positions that the European Commission has been defending in various Competition cases will be implemented. An example is that of pre-installed applications that cannot be removed, services that force us to accept if we want to use a certain application or the default inclusion of certain browsers.

Take the case of what is known as Android’s ‘Choice Screen’. As soon as the DMA comes into action, all large companies will be aware that they have this obligation. Although, the obligation will only apply to search engines and browsers, since creating a choice screen for all the tools would be very cumbersome.

The bottom line is to avoid going case by case. The DMA establishes that data such as those from Instagram and Facebook cannot be mixed, nor can it be prohibited to download personal data to take it to another ecosystem. In this direction, large companies have already anticipated with initiatives such as the Data Transfer Project. Amazon is not there though. With the arrival of the DMA, Amazon will have the obligation to join this initiative or something similar.

It also affects app stores and payment systems. Another example of what are currently individual trials and that will end up becoming law. We are talking, for example, about Epic Games’ fight with Apple and the possibility of using their own payment systems. Also the presence of alternative app stores in operating systems such as iOS or Android. The DMA will force this interoperability, although under a concept that opens the door to many interpretations.

Google opens up to a historic change in the Play Store.  Alternative payment systems are closer

FRAND. They stand for ‘fair, reasonable, and non-discriminatory terms’. This phrase is the one that will appear in certain sections such as the obligations of companies towards developers. In other words, the interoperability or compatibility of services with the competition will not always be, since it is technically unthinkable, but rather under reasonable terms. Predictably, this definition of “reasonable” is where many large companies take refuge to justify that they have not yet added compatibility with the competition.

Social networks and the media are for another time. While messaging applications and app stores are included in these obligations, the European Parliament has decided to leave out social networks, due to a complex issue regarding content moderation. The media and their relationship with services such as Google News are also not included. The copyright debate will be addressed outside of the DMA.

Some aspects have been left for its sister, the Digital Services Act (DSA). For example, the fact of managing data jointly and its use in advertising. The final text of the two laws is still pending and will foreseeably give rise to many debates.

The Big Tech have just over 6 months to start applying the changes. The agreement has to be ratified by the Council of the European Union and by the plenary session of the European Parliament, something that once an agreement is reached is expected to happen soon. Once voted, after 20 days it will come into force. Companies will have a margin of 6 months to carry out the changes required by law. Once this time has passed, those who do not comply with the DMA will face million-dollar fines, which may be 10% of their total world volume or up to 20% in case of repeated infringement. That is, fines equivalent to the different Competition cases that have been serving as an example during previous years.

What happens to the money from the fines that the EU puts on big technology companies

Following the times, from the beginning of 2023 we could begin to see the first fines for companies that have not adapted to the regulations. “What we have learned over the years is that we can correct specific cases, but when things become systematic, we need regulation,” Explain Margrethe Vestager, European Commissioner for Competition. After a decade of lawsuits and million-dollar fines for companies like Google, Amazon or Facebook, the European Union now has a law where it highlights all the obligations that technology companies must comply with.

The Digital Markets Law (DMA) is called to change the technology sector. A directive so ambitious by the European Union…

The Digital Markets Law (DMA) is called to change the technology sector. A directive so ambitious by the European Union…

Leave a Reply

Your email address will not be published.