European Commission designates tech giants as digital gatekeepers under the Digital Markets Act

In a landmark move, the European Commission has taken a significant step in regulating the tech industry by designating six global tech giants as “gatekeepers” under the Digital Markets Act (DMA). These gatekeepers include Alphabet (Google), Amazon, Apple, ByteDance (TikTok), Meta (Facebook), and Microsoft. The move is part of a broader effort to ensure fairness, competition, and transparency in the digital sector.

The DMA is a set of regulations that came into force in November 2022 and began to be applied in May 2023. Its primary aim is to create fair and competitive markets in the digital realm. It focuses on regulating gatekeepers and large online platforms that hold a significant influence over the digital economy.

Companies that provide at least one of ten core platform services, such as app stores, online search engines, social networking services, and more, are presumed to be gatekeepers if they meet specific criteria. These criteria include achieving a substantial annual turnover in the European Economic Area and providing a core platform service in at least three EU Member States. Moreover, a company must provide a core platform service to more than 45 million monthly active end users in the EU and to more than 10,000 yearly active business users in the EU. These criteria must be met for at least three years.

The recent designation has far-reaching implications for the digital landscape. Six tech giants are now officially recognized as gatekeepers. They will have six months to ensure full compliance with the DMA obligations for each of their designated core platform services.

The DMA obliges gatekeepers to follow a set of rules and regulations, which are designed to prevent them from imposing unfair conditions on businesses and end users and to ensure transparency in digital services. The goal is to prevent gatekeepers from creating bottlenecks in the digital economy. The designated gatekeepers are required to comply with the DMA's obligations, and they have six months to submit detailed compliance reports outlining their adherence to these regulations. The European Commission will closely monitor their implementation. Should a gatekeeper fail to comply with DMA obligations, the Commission has the authority to impose fines of up to 10% of the company's total worldwide turnover, which can increase to 20% in the case of repeated infringements. In cases of systematic violations, additional remedies, such as requiring a gatekeeper to divest a business segment or banning them from acquiring related services, may be imposed.

Significantly, ByteDance has also been designated as a gatekeeper by the EU, following the global scrutiny surrounding its social media platform, Tiktok. Regulators worldwide have expressed concerns about Tiktok’s rapid rise in popularity and its potential for disseminating misleading information, particularly to a younger audience, including children. A clear illustration of these concerns is the Ireland Data Protection Commission's (DPC) recent decision involving TikTok and its infringement of the GDPR's fairness principle, and condemning TikTok’s practice which puts the privacy of child users at risk. The DPC required TikTok to align its data processing practices with EU standards and imposed substantial administrative fines totalling €345 million.

In addition to designating the gatekeepers, the European Commission has also opened market investigations to assess Microsoft and Apple's submissions. Despite not initially meeting the criteria, the European Comission believes that Microsoft's Bing, Edge, Microsoft Advertising, and Apple's iMessage and iPadOS (operating system for iPads) qualify as gatekeepers, but both companies disagree.

The European Commission's designation of the tech giants as gatekeepers under the DMA represents a significant step in regulating the digital industry. This move aims to create fair, competitive, and transparent markets while holding gatekeepers accountable for their actions. It sends a clear message that digital giants are not above the law, and they must comply with regulations to ensure a level playing field for all players in the digital economy.