While the Digital Markets Unit has started work in the UK, the EU is progressing the Digital Markets Act. It proposed the Act (actually, a draft Regulation) in December 2020.  It is considered, along with the Digital Services Act, to be a centrepiece of EU digital strategy.

The Act will ban certain practices used by large platforms acting as “gatekeepers” and enable the European Commission to carry out market investigations and sanction non-compliant behaviour.  A company will be a “gatekeeper” if it has a market capitalisation of at least €75 billion or an annual turnover of €7.5 billion. To be designated as “gatekeepers”, these companies must also provide certain services such as browsers, messengers or social media, which have at least 45 million monthly end users in the EU, and 10,000 annual business users. SMEs are generally exempt from being gatekeepers. That said, there is a category of "emerging gatekeeper" on whom the Commission can impose obligations - companies whose competitive position is proven but not yet sustainable.

The duties on gatekeepers include, among other things:

• allowing third parties to inter-operate with the gatekeeper’s own services in certain situations;
• allowing their business users to access the data that they generate using the gatekeeper’s platform;
• providing companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper; and
• allowing their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform.

Gatekeeper platforms will not be permitted to:

• treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper's platform;
• prevent consumers from linking up to businesses outside their platforms; or
• prevent users from un-installing any pre-installed software or app if they wish so.

In addition:

• The largest messaging services (such as Whatsapp, Facebook Messenger or iMessage) will have to interoperate with smaller messaging platforms, if they so request. Users of small or big platforms would then be able to exchange messages, send files or make video calls across messaging apps, giving them more choice. The EU will assess interoperability obligations for social networks in future.
• Combining personal data for targeted advertising will only be allowed with explicit consent.
• Users will be able to freely choose their browser, virtual assistants or search engines.

Enforcement

If a gatekeeper does not comply with the rules, the Commission can impose fines of up to 10% of its total worldwide turnover in the preceding financial year, and 20% for repeated infringements. If a gatekeeper systematically fails to comply with the DMA (at least three breaches in eight years), the Commission can open a market investigation, potentially leading to behavioural or structural remedies (including a merger ban).

Next steps

The legal text needs 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.

The new requirements will have a substantial effect on the way digital markets function.  Organisations active in the sector will need to get to grips with the new rules in the EU and in the UK, and note that there may be differences between the two (for example an organisation may be considered to be a gatekeeper under EU rules but not have significant market status in the UK, or the other way round).