Explained | What is the E.U. Digital Markets Act?

The Digital Markets Act was enforced in the European Union on Tuesday, seven months after it was agreed upon by the European Parliament in March this year. It introduces penal provisions and quantitative thresholds to keep a check on undue dominance of certain companies in the tech space.

The story so far: The Digital Markets Act (DMA) entered into force in the European Union (EU) on November 1, seven months after it was agreed for by the European Parliament in March this year.

The bill, which was first proposed by the European Commission in December 2020, endeavours to put an end to unfair practices by tech companies that act as ‘gatekeepers’ in the online space. In simpler terms, it seeks to confront the domination of Big Tech which restrains the growth of new and alternate platforms. However, critics have put forth that this would hinder innovation in the sector, especially if they are asked to share information and expertise essential for their own competitive success. 

The Act will apply six months after it entered into force, that is, from May 2, 2023.

The Digital Markets Actintroduces quantitative thresholds and penal provisions to keep a check on platforms that act as private rule-makers by virtue of their dominance in the space, thereby creating bottlenecks in the digital economy. The obligations mentioned under the Act are meant to open up possibilities for smaller and emerging players to compete in an equal market – based on the merits of their products and services, in turn, also generating the scope for further innovation in the space. 

As for consumers, the Act ensures access to a wider array of options as well as a lower price of services made possible by enforcing competition and de-exclusivities. 

The Act designates companies with sizeable dominance in any of the ‘core platform services’ as ‘gatekeepers’. These services include app stores, online search engines, social networking services, certain messaging services, video sharing platform services, virtual assistants, web browsers, cloud computing services, operating systems, online marketplaces and advertising services.  

Other than this, the emergence of newer innovations and more players are also expected to create more jobs in the sector.