In an important development, the European Union (EU) Commission has formally categorized six leading tech companies as “gatekeepers” in accordance with the Digital Markets Act (DMA). This historic proclamation, revealed by the EU Commission, targets Apple, Google, Meta, Microsoft, Amazon, and ByteDance, acknowledging their substantial influence within the digital sphere.
DMA's Objective: Regulating Tech Industry Titans
The DMA, a legislative initiative within the EU, endeavors to address mounting concerns pertaining to market dominance and anti-competitive practices within the tech sector. Its mission is to level the playing field for digital enterprises by vigilantly overseeing the operations of firms wielding significant market clout.
Under the terminology of the law, controlling big tech platforms are called “gatekeepers”. These are platforms that have a huge impact on the EU's internal market and serve as intermediaries for millions of users and businesses.
The DMA, which came into force in May, lays down a number of rules for gatekeepers, such as not favoring their own services, allowing users to uninstall pre-installed apps, and sharing data with rivals. The DMA also empowers the European Commission to fine gatekeepers up to 10% of their annual revenue, or even break them up or ban them if they keep violating the rules.
The Digital Markets Act (DMA) identifies gatekeepers based on their revenue, user numbers, and other criteria. Services that are labeled as ‘gatekeeper' must have over 45 million monthly active users in the EU and either a turnover exceeding 7.5 billion euros annually or a market cap surpassing 75 billion euros.
In July, seven major tech companies admitted that they are big enough to be gatekeepers: seven companies have officially confirmed they meet the criteria: Alphabet (Google), Amazon, Apple, ByteDance (TikTok), Meta (Facebook, Instagram, Whatsapp), Microsoft, and Samsung.
Identification of Gatekeepers
The EU Commission's decision to designate Apple, Google, Meta, Microsoft, Amazon, and ByteDance as gatekeepers aligns with the criteria delineated in the DMA. These criteria encompass their profound impact on the internal market, their intermediary roles connecting businesses and consumers, and their capacity to wield substantial market power, which could potentially lead to unfair competition.
Official Announcement and Commission's Perspective
On September 6, 2023, the European Commission issued an official statement declaring, “We have classified these companies as gatekeepers under the Digital Markets Act due to their significant market influence and potential to distort competition.” This determination follows a comprehensive examination of these tech giants' market positions and activities.
Margrethe Vestager, the Executive Vice President of the European Commission, underscored the Commission's objective, stating, “Our goal is to ensure that these gatekeepers do not misuse their position to impede competition, limit choice, or hinder innovation in the digital domain.”
Despite being named among the seven companies and acknowledging their position as gatekeepers, Microsoft and Apple have expressed concerns about the DMA. Specifically, the two companies believe the gatekeeper designation is too broad. They contend that their services Microsoft Bing and Apple's Siri do not meet the definitions of gatekeeper services.
Response from the Tech Giants
In response to the EU's designation, several of the affected tech corporations have affirmed their commitment to cooperate with regulatory authorities. Nevertheless, specific details of their responses have not been disclosed in the available sources.
Subsequent Measures and Enforcement
The classification of Apple, Google, Meta, Microsoft, Amazon, and ByteDance as gatekeepers under the DMA marks a pivotal development in ongoing efforts to regulate the digital market within the EU. The European Commission will now proceed with enforcement measures to ensure these companies comply with the DMA's regulations.
The DMA introduces a range of obligations for gatekeepers, including sharing data with competitors, ensuring transparency in advertising practices, and refraining from engaging in anti-competitive behavior. Failure to adhere to these regulations may result in substantial fines and penalties.