The European Commission has set out its Digital Markets Act in an attempt to rein in the “gatekeepers” of the internet.
Unveiled yesterday, the Digital Markets Act sets out new rules for large online platforms that have “a significant impact on the internal market” in order to stop them from creating unfair conditions for businesses and consumers.
The act is part of the Digital Services Act package, a set of new rules designed to “create a safer and more open digital space”.
The act will apply to search engines, social networking services, some messaging services that have large user bases in the European Union with an annual turnover in Europe of €6.5bn or higher.
Organisations that meet these criteria will have extra responsibilities in ensuring an “open online environment that is fair for businesses and consumers, and open to innovation by all”.
These include allowing third parties to interoperate with the company’s own services in certain circumstances. They will also need to provide access to performance measuring tools for companies advertising on their platforms as well as providing business users with data generated by their activities on their platform.
Gatekeepers will not be allowed to block users from un-installing any pre-installed software or apps, use data from business users to compete with said businesses, and must not impact users’ ability to access services that they may have acquired outside of the platform.
Enforcement of the act will be overseen by the European Commission, which will assess which companies qualify as gatekeepers. Those identified will have six months from the act coming into force to comply.
In the event of non-compliance, the Commission can impose fines of up to 10% of the company’s total worldwide annual turnover and periodic penalty payments of up to 5% of the company’s total worldwide annual turnover. It will also have the power to impose “additional remedies” if needed.
This follows the announcement that the UK’s Competition and Markets Authority would be bringing in its own code of conduct for online platforms to address alleged anti-competitive practices.
Matthew Hodgson, CEO of Element described the Digital Markets Act as a “major win for consumers” for promoting interoperability between messaging apps.
“People won’t be forced into or trapped within walled gardens like Facebook Messenger, WhatsApp and Signal.,” he said.
“Instead, they can choose whichever app they prefer, and then communicate with anyone – just like you can choose your email provider and still email people that use a different one, or call people on different phone networks.”
He added that it’s an “initial blow to the likes of Facebook and Google whose business model is based on collecting and harvesting users’ data”.
The European Commission also unveiled the Digital Services Act, rules for online intermediary services such as internet service providers, search engines and social media platforms, designed to protect users from illegal content while protecting users’ fundamental rights online and making it easier for smaller platforms, SMEs and startups to grow.