[To Eurosmart members only]

Digital Markets Act: Member States find an agreement

Yesterday [25 November], EU Member States agreed on their position on the Digital Markets Act (DMA). This agreement follows a favourable vote in the European Parliament (see the previous briefing here). Thus, the legislative process is going smoothly, not even a year after the Commission proposed the text. For such an instrumental text, this is a short amount of time to find an agreement, which shows that the Council dedicated many resources to the file.

The objective of the DMA is to ensure that digital markets remain fair and contestable. It targets providers of “core platform services” (e.g. marketplaces, app stores, operating systems) that are in a position of gatekeeper in the market. Those gatekeepers need to comply with a set of obligations. In short, the DMA aims to ensure that gatekeepers do not abuse their dominant market position at the expense of business users or end-users (e.g. better ranking of their products compared to competitors, combination of data resulting in unfair advantage etc.).

Please find below the link to the Council’s text and a summary of the key points.

Scope

The DMA applies to core platform services offered by gatekeepers to business users established in the Union or end-users established or located in the Union, irrespective of the place of establishment or residence of the gatekeepers and irrespective of the law otherwise applicable to the provision of service. 

The DMA lays down criteria to define what a gatekeeper is (number of active users etc.).

The regulation covers the following services:

(a) online intermediation services;

(b) online search engines;

(c) online social networking services;

(d) video-sharing platform services;

(e) number-independent interpersonal communication services;

(f) operating systems;

(g) cloud computing services;

(h) advertising services, including any advertising networks, advertising exchanges and any other advertising intermediation services, provided by an undertaking providing any of the core platform services listed in points (a) to (g);

An “operating system” is defined as “a system software which controls the basic functions of the hardware or software and enables software applications to run on it”.

Ancillary services are also covered by the text; they are services provided in the context of core platform services, including payment services and identification services.

Obligations of the gatekeepers: identification and payments services

The DMA intends to revert the situation whereby gatekeepers’ identification and payment services have an advantage because these services are provided by the gatekeeper together with other services. It should be possible for (third party) providers of identification and payment services to compete.

By contrast with the European Parliament, Member States considered that a gatekeeper cannot oblige end-users – in addition to business users- to use or to interoperate with the identification or payment service of the gatekeeper in the context of services offered by the business users. Thus, Member States broadened the scope of this provision.

However, Member States are in line with the European Parliament regarding access to hardware or software features for identification and payment (i.e. ancillary services). Gatekeepers shall “allow business users and undertakings providing ancillary services access to and interoperability with the same operating system, hardware or software features that are available or used in the provision by the gatekeeper of any ancillary services”. This could limit the possibility to interact with some features if those are not used by the gatekeeper to provide its own service (e.g. the gatekeeper does not use the secure element for its identification system; hence third parties cannot access it).

Obligations of gatekeepers: third party applications and application stores

The DMA gives a broader choice to end-users when it comes to applications and application stores. First, end-users will be able to uninstall software applications provided by gatekeepers. Secondly, end-users will be able to install and effectively use (thanks to interoperability) third party software applications or application stores.

Next steps:

December: European Parliament to adopt the text during its plenary session

2022: Negotiations between the Council and the European Parliament to start

If you have any questions on this topic, please do not hesitate to contact Camille Dornier - Policy Manager: camille.dornier@eurosmart.com