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March 25, 2022

EU antitrust law close to approval despite lobbying from Big Tech

The European Union (EU) is close to unveiling its Digital Market Act (DMA) after almost two years of negotiations between the EU institutions and member states. The law will mark the first attempt to set the rules on how large online platforms must compete in the EU market.

What makes the DMA innovative is that EU antitrust enforcers would abandon lengthy proceedings against large platforms in favor of ensuring minimum conditions to avoid monopolies.

EU focus is on ‘gatekeepers’

The new law will be the first example of strict and transparent rules applied to digital platforms before they engage in any anticompetitive behavior. The DMA aims to constrain platforms so that they do not become monopolies. It defines scale in terms of both global turnover and the number of users to identify ‘gatekeepers’ that require monitoring.

It is likely that in the approved law this definition will apply to all platforms with at least 45 million monthly active users, with a turnover of at least EUR6.5 billion ($7.9 billion) and activities in at least three EU countries, as originally envisaged by the European Commission proposal. This approach will allow regulators to address structural competition problems without finding an infringement of antitrust rules. In determining the regulation targets, the DMA only applies to platforms that have a significant number of users across the EU and generate substantial revenues.

Legislators agreed on innovative changes

Among the proposed prohibited behaviors, the act is likely to restrict the ‘price-parity’ clause, which prevents business users from offering better terms through other sales channels. These behaviors were already scrutinized at the EU level, such as Apple tying the use of its App Store to its payment services and certain advertising practices by Google.

Another measure agreed between legislators in Brussels will force messaging services to interact with competing services from smaller rivals. This could mean that a user of Meta-owned WhatsApp would be able to send messages directly to a user on an entirely different messaging service. This would be the first example of data interoperability mandated across platforms to encourage competition. Legislators working at the DMA have long suggested that forcing companies to open up their data might be a useful remedy at the regulators’ disposal to ensure that new entrants compete for business on a level playing field.

Users will also have the legal right to uninstall applications. At the moment, companies such as Apple and Google preload many of their services onto devices without giving consumers a choice.

Washington-backed intense lobbying fails

Google, Amazon, Facebook, Apple, and Microsoft all meet these criteria, but the law is likely to also include far more groups than previously thought, such as accommodations site Booking.com and ecommerce group Alibaba. US Big Tech companies have been waging an intensive lobbying campaign to push changes in the ‘gatekeepers’ rule.

These efforts even included a policy document presented by Washington’s officials for the DMA to avoid disproportionately targeting US companies. However, EU officials have disregarded these claims. Thierry Breton, the EU internal markets commissioner, accused US officials of lobbying on behalf of the sector, adding: “This is not something that we do against anybody. We do it for our European fellow citizens and our companies. This is our duty.”