Digital Markets Act

Regulation 2022/1925 on contestable and fair markets in the digital sector

Background and Scope

Following the rapid digitalization of the economy, a small number of large digital platforms have come to act as key middlemen, controlling access to markets and holding significant market power. Recognizing that such concentration has created dependency among business users and has limited consumer choice, the European Union adopted the Digital Markets Act (DMA) with the aim of ensuring a fair and contestable digital market. The DMA establishes rules for large online platforms, designated as “gatekeepers”, and addresses practices that may restrict competition and innovation in the digital sector. As an ex-ante regulation, the DMA aims to address potentially harmful practices before they occur and accordingly operates in parallel with EU and national competition laws, notably Article 101 and 102 of the Treaty on the Functioning of the European Union.

The obligations imposed on gatekeepers include, inter alia, prohibitions on certain data usage practices, self-preferencing of their own products and services, and pre-installation of applications or default settings, as well as requirements relating to interoperability. If a gatekeeper fails to comply with the DMA, the Commission may impose a fine of up to 10 percent of its total worldwide turnover in the preceding financial year, and up to 20 percent in the case of repeated non-compliance.

The DMA applies to providers of so-called “Core Platform Services”, including online search engines, app stores, operating systems, cloud computing services, and online advertising services, provided that such undertakings meet certain cumulative quantitative thresholds relating to their number of users and either their annual European Economic Area (EEA) turnover, or their fair market value. Alternatively, the Commission may designate an undertaking as a gatekeeper through a qualitative assessment based on its market position and influence.

Key Obligations

• Transparency and access: Gatekeepers are required to apply fair, reasonable, and non-discriminatory general conditions governing business users’ access to their core platform services and to provide advertisers and business users with transparent information regarding pricing and performance data.
• Prohibitions on restricting competition: Gatekeepers must not restrict end users’ ability to switch between software applications and services, prevent business users from offering products or services at different prices or conditions on third-party platforms, or impose disproportionate conditions for the termination of a core platform service.
• Self-preferencing and data misuse: Gatekeepers are prohibited from ranking their own products or services more favourably than those of third parties, from using non-publicly available data generated by business users to compete against them, and from combining or cross-using personal data across core platform services without explicit consent.
• Business Users: Business users are entitled to freely promote offers and conclude contracts with end users acquired through or outside the gatekeeper’s platform, without the gatekeeper imposing the use of its own identification, browser, or payment services.