The Digital Markets Act (DMA) is a landmark regulation introduced by the European Commission (EC) to regulate digital markets and ensure fair competition among tech giants and smaller entities using their platforms and services.
What you’ll find in this article:
- answers to the top 30 DMA questions
- insights into the regulation’s objectives
- impacts on small and large businesses
- provisions of the regulation
- restrictions for large online platforms and service providers
- and more
Whether you’re a business owner, marketer, web manager, or legal professional, understanding the DMA and its requirements is crucial to enable compliance, continued access to the designated gatekeepers’ services, and staying ahead in the evolving digital landscape.
Data privacy is complex and ever-evolving, which can be challenging, especially for smaller organizations that do not have a lot of dedicated legal or compliance resources. The DMA requires your careful attention. Our goal is to simplify the education and compliance process for you, providing the clarity and guidance you need to navigate the DMA’s complexities with confidence.
What is the Digital Markets Act (DMA)?
The Digital Markets Act (DMA) is a regulatory framework introduced by the European Union’s Commission to regulate digital markets and address challenges to data privacy and the dominance of online tech giants. The law aims to ensure fair competition, enhance consumer protection, and promote innovation in the digital ecosystem. The DMA will have a significant impact on how large online platforms and the smaller third parties that use their services handle user consent and data.
Why was the DMA introduced?
The European Commission introduced the DMA in response to growing concerns about the power of dominant large tech enterprises that have digital platforms with enormous global reach. These companies have a significant and growing impact on competition, innovation, and consumer welfare. The law reflects the EU’s commitment to addressing the challenges posed by the digital economy in the 21st century.
The DMA’s role is to regulate the digital market, help ensure competition, and protect privacy, ensuring that the ecosystem operates in a way that is fair and beneficial to both businesses and consumers in the European Union.
What does the DMA aim to achieve?
The DMA has three main objectives:
- fostering competition in digital markets
- addressing unfair practices by the tech giants that control large online platforms
- safeguarding the interests of smaller businesses and consumers
By imposing specific obligations on tech enterprises that currently dominate the market—designated as gatekeepers by the DMA—the law seeks to create a more transparent, competitive, and user-centric digital commercial environment.
Who does the Digital Markets Act apply to?
The DMA applies to companies that operate large online platforms meeting specific criteria, such as having a significant impact on digital markets, acting as intermediaries between businesses and users, and enjoying a durable position of market power with significant influence over innovation. These platforms will be subject to enhanced regulatory obligations and scrutiny under the DMA.
The six gatekeepers designated by the European Commission are:
- Meta (owner of Facebook, Instagram, WhatsApp, and others)
- Alphabet (owner of Google and Android)
- ByteDance (owner of TikTok)
Although the DMA applies to these gatekeepers, smaller businesses should also be aware of and understand the law, as it’ll directly impact how they use the large online platforms and services owned by gatekeepers. Business owners will be responsible for following the compliance rules imposed by digital services such as Google and Amazon.
What are the key provisions of the DMA?
The DMA introduces several key provisions, including:
- obligations for gatekeeper platforms to refrain from unfair or anti-competitive practices
- provide access to data collected on or generated by their platforms
- ensure interoperability
- avoid preferential treatment of their own or specific partners’ functionality or services
The DMA also establishes a Digital Markets Unit (DMU) to monitor and enforce compliance with the law, and grants the DMU the power to impose fines and other remedies for noncompliance.
How will the DMA impact digital platforms?
For businesses, the DMA brings both opportunities and challenges. On one hand, it allows for more customized product promotion on gatekeepers’ platforms. On the other hand, it enforces stricter rules regarding personal data use in advertising, potentially impacting marketing strategies and small business revenue. Furthermore, the DMA prohibits retargeting of minors, making consent management more complex.
Gatekeepers will establish rules for use of their platforms in order to achieve DMA compliance. All third-party companies using their services will need to follow these rules and align their operations with the gatekeepers’ policies to ensure continued access to them. Losing access to Google for advertising purposes, for example, could be a huge blow to a smaller company’s revenue.
The DMA will also impact digital applications. The new law will make it possible for users to send and receive messages across different messaging apps. For instance, if you send a message using Messenger, someone using Signal or WhatsApp will now be able to read it, and vice versa.
In addition, users will be able to uninstall preloaded applications from their devices, as the promotion and advertising of services across different operating platforms will no longer be allowed. This means users won’t be prompted to use various services from a single tech giant’s ecosystem. For instance, when using iOS, it won’t be suggested to users to set Safari as their default browser, or Chrome when using Android.
The DMA will impose limitations on gatekeepers to ensure that users can easily stop using or remove services from their devices. For instance, every app will feature a user-friendly interface that guides users to install it smoothly and uninstall it just as easily. This means that smaller players have a chance to attract more users to their platforms, and with that growth become in a better position to innovate and create new features and applications.
As the DMA affects the European Union (EU), European Economic Area (EEA) and United Kingdom (UK), these changes will only affect consumers in these regions, and not users of the gatekeepers’ platforms and services worldwide.
Will the DMA create a level playing field for all market players?
The DMA aims to create a level playing field for all companies operating in the digital marketplace, and will help foster competition and innovation. The DMA’s rules enable smaller competitors fair access to the market, data, and users, reducing the advantage and disproportionate control currently enjoyed by the large online platforms.
The DMA requires gatekeepers to give companies access to the data they collect from them, both about activities on the platforms and technology driving them, like algorithms, but also user-generated data. This will enable companies to compete more effectively with the tech giants by gaining access to the same insights. The Act also requires gatekeepers to treat all companies that use their platforms equally. This will help to prevent discrimination and give smaller companies a fairer chance to compete in the digital market.
How will the Digital Markets Act address unfair practices by dominant platforms?
Gatekeepers will be prohibited from engaging in practices that discourage competition, such as preferential promotion of their own products or services, leveraging user data, or impeding interoperability. The DMA empowers the DMU to enforce these provisions and take appropriate action against unfair practices.
What is the role of the Digital Markets Unit (DMU)?
The Digital Markets Unit (DMU) is a regulatory body established under the DMA to monitor and enforce compliance with the regulation. It will have the authority to investigate the gatekeepers and operations on their platforms, assess their market power, and impose fines and other remedies for noncompliance.
How will the DMU enforce the DMA?
The DMU will enforce the DMA through a combination of investigative powers, monitoring mechanisms, and penalties for noncompliance. It will have the authority to request information from gatekeeper platforms in response to complaints and in the course of investigations, and impose fines for noncompliance.
Can the DMA force gatekeepers to share data with competitors?
Yes, the DMA requires gatekeepers to provide access to certain types of data from their platforms to competitors and third-party companies using the platforms. The exact scope and conditions for data sharing will be subject to further guidelines and assessments by the DMU, but they will have enforcement ability regarding this access.
Will the DMA lead to stricter merger control for digital platforms?
Yes, the DMA introduces stricter rules for mergers and acquisitions involving large digital players. It gives the European Commission the authority to examine and potentially stop these deals if they would result in monopolies and could harm competition or the interests of other businesses and consumers. This means that the DMA helps to monitor and regulate consolidation of market power.
How will the Digital Markets Act affect online advertising?
The DMA will have a significant impact on online advertising. It introduces specific obligations for gatekeepers’ platforms regarding the transparency and fairness of advertising services. These platforms will be required to provide advertisers with transparent access to data, fair terms, and non-discriminatory operating conditions.
Moreover, the DMA restricts customer profiling, which is the practice of collecting and analyzing user data to create targeted advertising. This restriction is intended to protect user privacy and prevent the abuse of personal data by gatekeepers, helping to ensure a more fair and transparent advertising ecosystem.
Will the DMA lead to greater transparency in online ranking algorithms?
Yes, gatekeepers will be required to provide businesses using their platforms with clear and meaningful information about how their ranking algorithms function. This will help businesses understand how their products or services are ranked and enable them to make more informed decisions regarding their online presence and marketing strategies.
What penalties can be imposed for noncompliance with the DMA?
Gatekeepers that fail to comply with the DMA can face significant penalties. The DMU has the authority to impose fines of up to 10% of a company’s global annual turnover. Additionally, the DMU can impose behavioral and structural remedies, such as divestitures or operational changes, to address systemic competition issues and ensure compliance.
How will the DMA be implemented across EU member states?
The DMA will be implemented across EU member states and in the UK via a coordinated approach. While the DMA sets the overarching regulatory framework, its implementation and enforcement will be the responsibility of national authorities in each member state. This helps to ensure consistent application of the DMA’s provisions while allowing for regional flexibility in application and enforcement to be taken into account.
Will the DMA harmonize digital market regulations across the EU?
Yes. The DMA establishes a single set of rules that apply uniformly to gatekeepers and the digital platforms operating in the EU. This consistency is intended to replace the current patchwork of national regulations with a common regulatory framework. However, certain aspects of implementation may still be subject to national customization.
How will the Digital Markets Act impact innovation in digital markets?
While the DMA introduces stricter regulations for gatekeepers, it also recognizes the importance of innovation and allows for legitimate business practices that contribute to technological or commercial progress.
The DMA will impact innovation through increased transparency. Digital platforms will be required to provide more information about their practices, algorithms, and data usage. This transparency will enable smaller players to better understand how they can improve their services and products, ultimately leading to more innovative offerings in the market and better user experiences. Moreover, this increased transparency will also help foster trust among consumers, as they will have more control over their data and a better understanding of how it is being used and protected.
Can the DMA prevent large online platforms from self-preferencing?
Yes, the DMA prohibits gatekeepers from engaging in self-preferencing practices on their platforms. Self-preferencing refers to the practice of promoting the platform’s own products or services over those of competitors. Gatekeeper platforms will be required to ensure fair and nondiscriminatory treatment of their own offerings and those of third parties.
Will the DMA address concerns related to market concentration?
Yes, by imposing obligations and restrictions on the gatekeepers’ platforms and services and enhancing regulatory scrutiny, the DMA will help to prevent the abuse of market power. It seeks to ensure that no single platform or service provider dominates the market to the detriment of businesses, consumers, and overall market dynamics.
How will the DMA impact small and medium-sized enterprises (SMEs)?
While the primary focus of the DMA regulation is tech giants, small and medium sized enterprises (SMEs) that use their platforms for sales and marketing will also feel its effects. It’s highly likely that smaller companies will soon be required to follow new privacy rules that gatekeepers will establish to comply with the DMA. The law’s data privacy requirements, for example, apply to all personal data collected on these platforms, whether directly by gatekeepers or by the third parties using them.
Compliance with these new laws won’t have a one-size-fits-all solution. However, businesses should begin exploring platforms that replace outdated intrusive methods with transparent tools for obtaining user consent, tracking without cookies, reliance on first-party databases, and context-based advertising.
Will the DMA apply to large online platforms of non-European companies operating in the EU?
Yes, the DMA will apply to online platforms of non-European companies operating in the EU, provided they meet the criteria of being a gatekeeper, and in fact, all six of the designated gatekeepers are headquartered outside of the EU. The DMA’s scope extends to all platforms that have a significant impact on the European digital market, regardless of their geographic origin. This ensures that all platforms operating in the EU adhere to the same standards and do not engage in unfair practices.
The requirements of the DMA will also apply to platforms and services of non-European companies operating in the EU if they operate using the gatekeepers’ platforms and services and collect user data using them, even if they are not themselves designated as gatekeepers. These companies could also be quite large and be influential in digital markets.
Can the DMA be modified or updated in the future?
Yes, the DMA can be modified or updated in the future to adapt to changing market dynamics and technological developments. Many global data privacy laws have undergone multiple series of updates. As the digital landscape evolves, the DMA may undergo revisions to address emerging challenges and new power players to ensure its continued effectiveness. This flexibility enables the regulation to remain relevant and responsive to technology, the regulatory landscape, and the market.
How does the Digital Markets Act differ from existing competition laws?
While existing laws tend to focus on general competition principles, the DMA introduces sector-specific regulatory requirements and obligations for gatekeepers and their large online platforms. It also supplements the European Union’s Antitrust law by introducing fair competition rules for particular digital players in Europe.
What are the criticisms of the Digital Markets Act?
The DMA has received both praise and criticism since its introduction. Critics argue that it could stifle innovation, impose excessive regulatory burdens, and potentially harm smaller platforms. They believe that the regulation may slow down the growth of digital platforms and discourage future investment.
Additionally, there are concerns about the practicality and enforceability of certain measures in the DMA. Critics argue that the prohibition on profiling in advertising could disrupt the targeted advertising ecosystem, impacting the revenue streams of digital platforms and publishers.
Critical voices also come from the US, claiming that the DMA will make the export of digital services to Europe more difficult and costly, resulting in a lower quality of services offered on the European digital market.
Overall, the DMA has sparked a lively debate about the balance between regulation and innovation in the digital market.
Will the DMA lead to higher costs for large online platforms?
While it is difficult to predict the exact impact of the DMA, it is possible that it could lead to higher costs for digital platforms. Achieving compliance with the DMA may require gatekeepers to invest in technology, staffing, and legal resources for the large digital platforms, which could increase their operating costs. The DMA will also impose fines for noncompliance, further increasing costs for large online platforms. Gatekeepers do download some responsibilities to third parties using their platforms, however, in requiring them to also meet DMA compliance requirements.
Can the DMA promote a more diverse and competitive digital ecosystem?
Yes, the DMA can promote a more diverse and competitive digital ecosystem. It encourages startups and smaller businesses to compete with established platforms, fostering innovation, audience access, and growth. The DMA also introduces measures to ensure data portability and interoperability, which can enhance competition by reducing barriers to entry and facilitating consumer choice.
How will the DMA be coordinated with other regulations?
The coordination of the DMA with other regulatory frameworks will be crucial to ensure consistency and avoid conflicts. The DMA is designed to complement existing regulations, such as GDPR, rather than replace them. The European Commission, responsible for enforcing the DMA, will work closely with other regulatory bodies, including national competition and data protection authorities, to ensure harmonization and coordination. Regular consultations and cooperation mechanisms will be established to exchange information, align enforcement actions, and address any overlaps or inconsistencies between the DMA and other regulatory frameworks.
When did the DMA come into effect?
In December 2020, the Commission proposed the legislation, which was agreed upon by the European Parliament and the Council in March 2022. The law entered into force in November 2022 and became applicable in May 2023. Companies designated as gatekeepers have 6 months time to comply with the requirements and obligations of the DMA.
How to get ready for the DMA?
For businesses, it should be one of top priorities to prepare for the DMA’s requirements, as this will highly influence their future in the European digital market. How to get ready for the DMA? First of all, it’s crucial to know what data your organization collects and uses, where and how, and with whom it’s shared. Check internal policies for handling user data, obtaining consent, and using data for various purposes or sharing them with third parties.
- Implement a DMA-ready privacy compliance solution that gets you ready for the DMA, such as Usercentrics Consent Management Platform (CMP) or use the Mobile App SDK. Start obtaining user consent in a way that is secure, respects users’ privacy and personal data, offers user consent analytics for insights to produce higher opt-in rates, and enables compliance with relevant data privacy laws.
- Subscribe to Usercentrics’ newsletter to stay informed about future DMA updates and more.
Final words on key DMA questions
Overall, the DMA represents a significant step towards regulating data privacy, the digital economy, and promoting fair competition. However, its success will depend on effective implementation and enforcement, as well as ongoing monitoring and modification to ensure that it continues to meet its goals. As technology, user expectations, innovation, regulations, and digital markets continue to evolve, it will be critical to adapt and update regulations like the DMA to keep pace with new challenges and opportunities.
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Usercentrics does not provide legal advice, and information is provided for educational purposes only. We always recommend engaging qualified legal counsel or privacy specialists regarding data privacy and protection issues and operations.