all about new standards for better regulation of the digital economy

After many months of negotiations, on Thursday 24 March 2022, the negotiators from the European Parliament and the Council reached a preliminary agreement. It aims to establish new rules to better regulate the digital market while limiting the abuse of dominance by major technology players such as GAFAM.

The purpose of this digital services legislation, more commonly referred to as Digital Markets Law (DMA) is to expel ” certain practices used by major platforms acting as gatekeepers “. Therefore, the DMA, which intends to act upstream to avoid anti-competitive practices, should also facilitate the work of the Market Investigation Commission and punish conduct that is not in accordance with the new law.

This agreement opens a new era in technology regulation worldwide. Digital marketplace legislation has put an end to the ever-increasing dominance of big tech companies. From now on, they will have to demonstrate that they allow the expression of free competition in the network. The new rules will help reinforce this basic principle. In this way, Europe guarantees more competition, innovation and choice for users, said German MEP and text rapporteur Andreas Schwab.

Who will be affected by the new DMA legislation?

The text is directed, in particular, large companies providing “core” platform services most prone to unfair business practices whose annual turnover exceeds 7.5 billion euros or whose market capitalization is at least 75 billion euros. These include browsers, messaging services and social networks that have at least 45 million monthly active users in the European Union and 10,000 professional members per year.

What are the 3 main metrics for AMD?

About twenty rules make up this Digital Markets Law, to prohibit any anti-competitive practices on the part of major online platforms and thus prevent them from prioritizing their own services to the detriment of other market participants. Here are 3 key metrics to remember from the DMA:

  • Interoperability of instant messaging services (WhatsApp, Facebook Messenger, iMessage, etc.) with smaller platforms (Signal, Telegram, etc.) if they ask to be able to send messages, make calls, or even exchange files between them,
  • The obligation of “explicit consent” to the provision of targeted advertising, which will provide better protection of personal data from several sources for the purposes of advertising profiling,
  • More freedom of choice for users choose your browser, your search engine, or even your virtual personal assistant, offering the possibility of using alternative platforms.

The new rules will also place the European Commission in control of takeover operations of technology players, regardless of the size of the target company, with the aim of limiting takeovers for the sole purpose of destroying a competitor in the same market.

What are the penalties for non-compliance with the DMA?

If “access controllers” that are subject to the new digital market rules fail to comply with direct memory access measures, they are subject to deterrent sanctions, applied immediately and without delay. These penalties can be up to 10% of the global turnover recorded during the previous financial year and up to 20% if a case of relapse is proven. The text could even give the European Commission the power to bar a sanctioned player from taking over other companies for a certain period of time if the infringement is systematically repeated.

What is the reaction of the main players concerned about AMD?

The GAFAM reaction was not long in coming. In a press release sent to AFP and shared with Le Monde, Apple shared its concerns about ” some provisions [qui] create unnecessary privacy and security vulnerabilities for our users, while others prevent us from charging fees for intellectual property in which we invest heavily. “.

For its part, Google expressed concern, announcing its readiness to cooperate with European authorities in the implementation of direct memory access. ” While we support many of the DMA’s ambitions for consumer choice and interoperability, we remain concerned about the potential risks to innovation and the variety of choices offered to Europeans. “, the US firm responded. When asked by AFP, Meta and Amazon were unwilling to convey their position on the matter.

What are the next steps for DMA?

If this is an important step forward regarding the future functioning of the digital economy, then the European text is currently only at the stage of preliminary agreement. It should indeed be presented to the Parliament and the Council with a view to its final adoption, which is expected in the summer of 2022. Once this stage has been passed, the text may enter into force 20 days after its publication in the Official Journal of the European Union.

The DMA rules should then begin to apply in six months, i.e. from January 2023, if the expected schedule is followed. It should be noted that the regulation of digital giants is a priority for the French Presidency of Europe, whose mandate ends on June 30th.

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