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Landslide vote in favour of Digital Markets Act

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Following yesterday’s (14 December) debate on the Digital Markets Act. MEPs have voted by 642 votes in favour, eight against and 46 abstentions to set new obligations and prohibitions on large platforms, to ensure fair and open markets.

The European Parliament and Commission held a debate in plenary ahead of the vote. While the proposal is complex, Executive Vice President Vestager said it could be summarized as ensuring that markets are open, fair and contestable, so that every business has a fair chance of attracting customers. 

Rapporteur Andreas Schwab (EPP, DE) welcomed the vote: “Today’s adoption of the DMA negotiating mandate sends a strong signal: the European Parliament stands against unfair business practices used by digital giants. We will make sure that digital markets are open and competitive. This is good for consumers, good for businesses and good for digital innovation. Our message is clear: the EU will enforce the rules of the social market economy also in the digital sphere, and this means that lawmakers dictate the rules of competition, not digital giants.”

One aspect that is particularly important for the European Parliament is the ability it gives the Commission to act  ex-ante, Stéphanie Yon-Courtin MEP (Renew, FR) said: “We're going to give the European Commission the means to prevent rather than cure, with a very clear list of obligations. We're going to establish the rules right from the outset, so that we won't have to fight for years against armies of lawyers.”

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Mozilla welcomed the vote: “People deserve a variety of products that are personalized to their preferences…People should have the ability to simply and easily try new apps, delete unwanted apps, switch between apps, change app defaults. The same is true of operation systems and online marketplaces - developers and merchants should be empowered to offer their products to consumers on an even footing with gatekeepers. A software war is till taking place and tech giants control the space. We look forward to European authorities enforcing these rules, with strength.”

The Act hasn't received a universal welcome, predictably the large tech portray the regulation as an attack directed at US companies.

Guarding the gatekeepers

The regulation will apply to the major companies providing so-called “core platform services” most prone to unfair practices, for example: social networks (Facebook), search engines (Google), operating systems (iOS), online advertising services, cloud computing, and video-sharing services (YouTube). MEPs added web browsers, virtual assistants and connected TV to the scope of the regulation.

The will have an annual turnover of €8 billion in the European Economic Area (EEA) and a market capitalisation of €80bn, and work in no fewer than three EU countries with at least 45 million monthly users, or 10,000 business users. The thresholds do not prevent the Commission from designating other companies as gatekeepers when they meet certain conditions.

Targeted Ads

MEPs included additional requirements on the use of data for targeted or micro-targeted advertising and the interoperability of services. The text says that a gatekeeper shall, “for its own commercial purposes, and the placement of third-party advertising in its own services, refrain from combining personal data for the purpose of delivering targeted or micro-targeted advertising”, except if there is a “clear, explicit, renewed, informed consent”, in line with the General Data Protection Regulation. In addition, personal data of minors shall not be processed for commercial purposes, such as direct marketing, profiling and behaviourally targeted advertising.

Temporarily halting “killer acquisitions”

MEPs agreed to empower the Commission to impose “structural or behavioural remedies” where gatekeepers have engaged in systematic non-compliance. The approved text foresees in particular the possibility for the Commission to restrict gatekeepers from making acquisitions in areas relevant to the DMA in order to remedy or prevent further damage to the internal market. Gatekeepers would also be obliged to inform the Commission of any intended concentration.

EU level cooperation, whistleblowers and fines

MEPs propose the creation of a “European High-Level Group of Digital Regulators” to facilitate co-operation and co-ordination between the Commission and member states in their enforcement decisions. They clarify the role of national competition authorities, while keeping the enforcement of the DMA in the hands of the Commission.

Internal Market Committee MEPs also say that the DMA should ensure adequate arrangements to enable whistleblowers to alert competent authorities to actual or potential infringements of this regulation and to protect them from retaliation.

If a gatekeeper does not comply with the rules, the Commission can impose fines of “not less than 4% and not exceeding 20%” of its total worldwide turnover in the preceding financial year, MEPs specify.

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