In a landmark decision, the European Union (EU) has designated six major technology companies as “gatekeepers,” subjecting them to a new set of regulations aimed at fostering competition and limiting market power. The companies in question are Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. This move is part of the EU’s Digital Markets Act (DMA), a comprehensive framework designed to regulate the behavior of large tech platforms.

The DMA Framework

The DMA identifies 22 core platform services operated by the six designated gatekeepers. These services range from social networks like TikTok, Facebook, and Instagram to operating systems like Google Android, iOS, and Windows PC OS. The DMA aims to proactively address competition concerns by setting specific criteria for designating gatekeepers, such as having 45 million+ active local users, a turnover of €7.5 billion+ in the last three financial years, and a market capitalization exceeding €75 billion.

Key Provisions

The DMA imposes several obligations on gatekeepers, including:

  • A ban on self-preferencing or requiring business users to use their services.
  • Data portability and service interoperability requirements.
  • A ban on tracking and profiling users for ad targeting without consent.

Failure to comply with these regulations could result in penalties scaling up to 10% of global annual turnover, or even 20% for severe repeat offences.

Industry Reactions

Alphabet/Google

Alphabet/Google expressed its commitment to working closely with the European Commission to meet the new requirements while maintaining a focus on user experience. The company emphasized its belief in offering choice and control to users and businesses.

Amazon

Amazon stated that it is committed to delivering services that meet customer requirements within Europe’s evolving regulatory landscape. The company plans to work constructively with the European Commission.

Apple

Apple expressed concerns about the privacy and data security risks posed by the DMA. The company is particularly focused on mitigating these impacts while continuing to deliver quality products and services to European customers.

Microsoft

Microsoft accepted its designation as a gatekeeper and welcomed the Commission’s decision to open a market investigation into Bing, Edge, and Microsoft Ads, which operate as challengers in the market.

TikTok

TikTok expressed disappointment with the decision, arguing that it brought choice to a market largely controlled by incumbents. The company is evaluating its next steps.

The Road Ahead

The DMA represents a significant shift in the EU’s approach to regulating Big Tech. While the act has been generally welcomed, it has also sparked early resistance from some tech giants, including Apple and Microsoft, who are challenging the Commission’s designation of certain services.

Moreover, the DMA is not set in stone. The Commission has the authority to designate more gatekeepers as market conditions evolve, and existing designations will be reviewed at least every three years.

Final Thoughts

The DMA is a bold step by the EU to level the playing field in the digital market. While it has been met with mixed reactions, its long-term impact on competition and consumer choice remains to be seen. As the compliance deadline in March 2024 approaches, all eyes will be on how these tech giants adapt to this new regulatory landscape.