A single market for tech giants

Yesterday, the European Commission released its proposed Digital Markets Act.  The proposal has been long awaited and fiercely debated since months. It is a significant part of the growing regulation of internet platforms, in Europe and in the rest of the world.  They complement the tools that the Commission and other competition authorities have applied where tech platforms directed user attention to their own offerings (Google shopping), treated personal data in ways that were found to infringe data protection roles (Facebook) or provided operating systems that nudged consumers towards their own apps (Android).   This enforcement took place in lengthy investigations and the decisions are still subject to ongoing appeals and judicial proceedings that delay their enforcement.   It is against this background that the Commission is now proposing a more robust and targeted set of rules.

Detailed assessments will no doubt follow as the proposal allows the debate between interested stakeholders to crystalize.  At first sight, the following points in particular seem worth noting:

- The proposal is for a European one stop shop.  Once the EU rules on digital gate keepers come into force, Member States can no longer apply their own rules.  Will Germany now press ahead with advanced plans to create a national regime that might become obsolete soon or rather press pause?  An initial reaction rather suggests that Germany thinks that its own rules can complement the ones at EU level.  

- Gatekeepers are only large digital players that operate a platform service with significant impact on the internal market.  A rebuttable presumption applies to companies with large turnover or market capitalization that have more than 45 million active users for a period of three financial years.   

- Enforcement will still take time, even once the regulation will be adopted.  Companies need to provide information.  Even where the presumption is met, it can be rebutted and the Commission is required to investigate where a company substantiates arguments to rebut the presumption. Both the designation as a gatekeeper and enforcement measures are subject to judicial protection. While a legal action does not suspend enforcement automatically, interim relief will in principle be available.  Where the Commission designates a gatekeeper, this will need to be kept under constant review.  

- Gatekeepers will face restrictions, for example in relation to using data across different services, self-preferencing, competing with their customers, having to allow their customers to build separate relationships with users, charging for digital services.  They have to report to the Commission on measures they implement to ensure compliance.  

- To reflect the fast moving nature of digital markets, the Commission has the power to introduce new obligations for gatekeepers without having to go through a full legislative process to amend the regulation.  

- The Commission may conduct market investigations to designate gatekeepers, assess new obligations or in the event of systematic non-compliance.   It may also investigate new services and practices to assess whether the scope of the regulation should be expanded to services that are initially not considered to be core platform services.  

- The powers in relation to fines and remedies are inspired by what has worked well for competition law enforcement.  They include in particular fines, penalty payments and, in the event of systematic non-compliance, remedies like forced access or the divestiture of certain service lines.