The Digital Markets Act proposes imposing sanctions for non-compliance, which could include fines of up to 10% of the gatekeeper’s worldwide turnover, to ensure the effectiveness of the new rules.
Yesterday, the European Commission proposed two bills—one focused on illegal content, the other on anticompetitive behaviour—that would empower regulators in some cases to levy fines of up 10% of annual world-wide revenue, or break up big tech companies to stop certain competition abuses.
The bills don’t mention any specific company but, one or both would likely apply to several large U.S. tech companies including Alphabet’s Google, Amazon, Apple and Facebook.
The European Commission noted that the Digital Markets Act addresses the negative consequences arising from certain behaviours by platforms acting as digital “gatekeepers” to the single market. These are platforms that have a significant impact on the internal market, serve as an important gateway for business users to reach their customers, and which enjoy, or will foreseeably enjoy, an entrenched and durable position. This can grant them the power to act as private rule-makers and to function as bottlenecks between businesses and consumers. Sometimes, such companies have control over entire platform ecosystems. When a gatekeeper engages in unfair business practices, it can prevent or slow down valuable and innovative services of its business users and competitors from reaching the consumer. Examples of these practices include the unfair use of data from businesses operating on these platforms, or situations where users are locked in to a particular service and have limited options for switching to another one.
Concretely, the Digital Markets Act will:
- Apply only to major providers of the core platform services most prone to unfair practices
- Define quantitative thresholds as a basis to identify presumed gatekeepers
- Prohibit a number of practices which are clearly unfair, such as blocking users from un-installing any pre-installed software or apps
- Require gatekeepers to proactively put in place certain measures, such as targeted measures allowing the software of third parties to properly function and interoperate with their own services
- Impose sanctions for non-compliance, which could include fines of up to 10% of the gatekeeper’s worldwide turnover, to ensure the effectiveness of the new rules. For recurrent infringers, these sanctions may also involve the obligation to take structural measures, potentially extending to divestiture of certain businesses, where no other equally effective alternative measure is available to ensure compliance.
