Digital Markets Act: The next major tech legislation is almost here

On Tuesday this week (July 5th), lawmakers in the European Union passed landmark antitrust regulations within the Digital Markets Act (DMA) that could significantly reshape the business models of many technology giants like Meta, Apple, Amazon, and Google.

Political agreement on its text was reached in March and now should enter into force in October and begin applying next spring.

In addition to the rules in the DMA, the Digital Services Act (DSA) was also approved, which requires online platforms to do more to police the internet for illegal content.

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What exactly does the DMA entail?

In practice, the DMA is intended to regulate everything from social media networks and search engines, through to cloud computing, as the perceived strategic access routes to consumers in the digital economy.

Companies will be prevented from favouring their own offering over rivals, or prevent users from removing pre-installed software or apps.

The main aspects of the legislation include:

• Large platforms will be banned from showing favouritism towards their own services in search engine results.
• It will be compulsory that users give their consent to the cross-referencing of data from several online services for the purpose of advertising profiling.
• The imposition of pre-installed software on computers or phones will be blocked, such as browsers or music applications, and all devices will facilitate the use of alternative products.
• Interoperability requirements for messaging services, meaning services like iMessage and WhatsApp will have to work with smaller messaging platforms.

The rules will apply to so-called “gatekeepers,” tech companies with a market capitalization of at least €75 billion or annual revenues within the EU of at least €7.5 billion in the past 3 years. They must also have at least 45 million monthly users or 10,000 business users within the EU.

Penalties for breaching the rules can be up to 10% of annual worldwide turnover in the case of first infringements, and up to 20% in the case of repeated infringements.

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What’s next?

While many agree, disagree, or find themselves somewhere in the middle regarding the introduction of the DMA, only time will tell in terms of how exactly it manifests in terms of both regulatory effectiveness while still keeping users and tech companies happy.

‍EU antitrust chief Margrethe Vestager summarised their goal with the DMA: "What we want is simple: fair markets also in digital.”

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