Will the Digital Markets Act affect you? , Allen & Overy LLP

The Digital Market Act (DMA) will have a significant impact on the operation of digital platforms. This requires large online platforms that act as “gatekeepers” to digital markets to comply with broader obligations. It aims to ensure that digital markets are more open and competitive.

The DMA sits alongside the Digital Services Act (DSA), which has a broader scope and provides for digital services that act as an intermediary in connecting consumers to goods, services and content. While the DMA aims to ensure a fair digital market, the DSA focuses on ensuring online security and transparency.

The obligations and prohibitions imposed by the DMA on gatekeepers include many aspects of their operation. They include restrictions on what they can do with user data, requirements to make the Services interoperable with third parties, and obligations to provide information to advertisers and publishers. The provisions of the DMA also prohibit activities such as putting Gatekeeper’s own products ahead of its competitors, pre-installation of certain apps or software, and forcing the use of Gatekeeper’s other services.

There are strict sanctions for non-compliance. If a gatekeeper does not comply with the rules, the European Commission (EC) can impose fines of up to 10% of its total worldwide turnover in the previous financial year, and up to 20% in case of repeated violations. In case of systematic violations, the EC can ban them from acquiring other companies for a certain period of time.

Timing of the Digital Markets Act

The official legal text of the DMA will be published in the EU Official Journal in the autumn of this year. It will come into force 20 days after publication and come into force six months later, possibly in March or April 2023.

Scope of Digital Markets Act

DMA applies to “gatekeepers” in digital markets who provide “key platform services” (CPS). These include online mediation services, online search engines, online social networking services, video-sharing platform services, number-independent interpersonal communication services, operating systems, web browsers, virtual assistants, cloud computing services, and online advertising services.

In this context a gatekeeper is identified by three qualitative criteria, which are considered satisfied if certain quantitative limits are met:

  1. A company must have a “significant influence” on the EU market

A company is considered to meet this criterion if it has: (a) achieved EU turnover equal to or more than EUR 7.5 billion in each of the last three financial years; or (b) the average market capitalization or equivalent fair market value in the previous financial year has been at least EUR75bn; And it provides similar CPS in at least three member states.

  1. Its CPS should be a “key gateway” between businesses and end users

A company is considered to meet this criterion if its CPS has at least: (a) 45 million monthly active end users established or located in the European Union; and (b) 10,000 annual active business users established in the European Union in the previous financial year.

  1. It should or is likely to have “a strong and durable position” soon

The company is considered to have met this criterion if the quantitative limit under Criterion 2 above was met in each of the last three financial years.

CPS providers must assess themselves whether they meet the threshold of being recognized as a gatekeeper. If they do so, they must notify the EC within two months from the date the DMA comes into force (or from the point that they begin to meet the criteria, if later). They then have a maximum of six months after being designated as a gatekeeper to comply with the new obligations.

Digital Markets Act obligations to key platform service providers

The DMA provides two broad categories of do’s and don’ts for gatekeepers.

The first category is designed so that gatekeepers can comply without requiring the EC to specify any further details. This includes the following obligations:

  • Not to process personal data of end-users of third-party services supplied through Gatekeeper’s Platform without the end user’s consent, for online advertising purposes.
  • Not to combine or cross-use end-users’ personal data or sign-in to other services in CPS or between CPS and other services to combine personal data, without the end-user’s consent.
  • Either ‘broad’ parity clauses (prohibiting business users from offering lower prices and better terms on any other online sales channels) or ‘narrow’ parity clauses (business users offering lower prices and better terms on their own sales channels) ban from offering) not to apply.
  • Free communication to business users and promotion of their products and services (including various conditions) to end users obtained through Gatekeeper’s CPS (or through other channels) and to conclude contracts with those end users to allow.
  • To allow End-Users to access and use through Gatekeeper’s CPS, content, subscriptions, features or other items by using a Business User’s software application, including those obtained outside Gatekeeper’s CPS .
  • Refrain from preventing business users or end users from raising the issue of Gatekeeper non-compliance with EU or national laws with relevant public authorities or national courts.
  • End-Users or Business Users are not required to subscribe or register with one of Gatekeeper’s CPS as a condition of using one of Gatekeeper’s CPS.
  • Reference to any identification service, web browser engine or payment service, or technical services that support the provision of payment services, such as payment system in-app purchases, services provided by business users using that Gatekeeper’s CPS In.
  • To provide to Advertisers and Publishers (or their authorized third parties) to whom a Concierge supplies Online Advertising Services, upon request and free of charge, at a price and fee (including any deductions and surcharges) paid by the Advertiser ) with related information on daily basis. and the publisher, as well as the amount of remuneration paid to the publisher (including any deductions and surcharges), and the metric on which each price, fee and remuneration is calculated for the publication of a given advertisement and for each relevant Advertising services provided by the concierge.

The second category of obligations are those that are “susceptible to be specified further”, which means that the EC can provide further clarity on whether the proposed method of enforcing the gatekeeper’s obligations is sufficient (which the EC may call upon on its own initiative). Or could check upon request the concierge). These include responsibilities:

  • Not to use non-publicly available data obtained by Gatekeeper in relation to Business Users who use Gatekeeper’s CPS to compete with those Business Users.
  • To allow and technically enable end-users to easily uninstall any software application or change default settings in Gatekeeper’s operating system, virtual assistant and web browser.
  • Allowing and technically enabling the installation and effective use of third party software applications or software application stores and allowing them to be set as defaults (subject to certain carvings relating to security measures).
  • The ranking and related indexing and crawling provided by Gatekeeper itself as compared to similar services or products of third parties, not treating the services and products more favorably and such rankings (prioritizing themselves) are transparent, fair and non-discriminatory. Enforcing discriminatory terms.
  • Not technically or otherwise restricting end users from switching between and subscribing to software applications and services accessed under a gatekeeper’s CPS.
  • To allow hardware and service providers and business users to access free and same hardware or software features with effective interoperability that are accessed or controlled through the operating system or Gatekeeper’s virtual assistant.
  • To provide advertisers and publishers and their authorized third parties, upon request and free of charge, GateKeeper’s performance measurement tools and data necessary for advertisers and publishers to conduct their own independent verification of ad inventory.
  • to provide, upon request and free of charge, effective portability of data (including tools to facilitate the effective exercise of such data portability) provided by the End-User or its generated through activity.
  • Subject to personal data restrictions, business users, or their authorized third parties, upon request and with free, effective, high quality, continuous and real-time access and use of aggregated and non-aggregated data (including personal data) To provide. that is provided or generated for the use of the relevant CPS (or services provided in conjunction with or in support of the relevant CPS) by those business users and end-users associated with the products or services provided by those business users.
  • To provide, upon request, access to fair, fair and non-discriminatory (FRAND) terms for ranking, querying, clicking and viewing any third-party providers of online search engines, free and paid searches generated by end-to-end In relation to- Users on the online search engine of the gatekeeper, subject to the anonymity of personal data.
  • To enforce the FRAND General Terms of Access for Business Users to Gatekeeper’s software application stores, online search engines and online social networking services (Gatekeeper must publish the General Terms of Access, including alternative dispute settlement mechanisms).
  • Not applying disproportionately general conditions to eliminate the provisions of the CPS and to ensure that these terms are exercised without difficulty.

In addition, gatekeepers will be subject to the following obligations:

  • Gatekeepers providing messenger services must make basic functionalities such as text messaging, video calls, interoperable with the services of other providers.
  • The Gatekeeper shall be obliged to notify the EC before the closure of all transactions: (i) where the Parties provide CPS or any other services in the digital sector; or (ii) which enables the collection of data.
  • The gatekeepers must report to the Election Commission the measures they have implemented to ensure compliance with the obligations.
  • Gatekeepers must also establish a compliance function, which should be independent of the companies’ operational functions.

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