EU Names Tech Gatekeepers, Sets Stage for Fair Competition

In a significant move to curb the market power of tech giants, the European Union has officially named six major companies as gatekeepers" under the Digital Markets Act (DMA).

The DMA, which has been operational since May, demonstrated its proactive stance by targeting these tech giants with significant market dominance.

According to the EU, the gatekeepers are Amazon, Google, Meta, Byte Dance, Apple, and Microsoft.

The DMA has also identified 22 core platform services that these gatekeepers operate. These encompass a wide range of categories, including social networks, ad delivery systems, intermediation services, browsers, operating systems, search engines, N-IICS platforms, and video-sharing platforms.

One of the primary criteria for receiving the gatekeeping designation is having more than 45 million local users. Also, the minimum turnover in the last three financial years for these companies should be more than 7.5 billion and market capitalization exceeding 75 billion.

The EU, however, retains discretion to make sure that the law is applicable to platforms that may potentially establish an entrenched and durable' position in the coming days.

The Selective Approach of DMA

Interestingly, Gmail and Outlook.com, which are both webmail services as well as cloud storage platforms, are not on this list. This shows the selective approach of the Commission while cracking down on the tech giants.

Norms have been formulated to prevent gatekeepers from banning business users from offering and promoting competing services.

The DMA has come up with stringent provisions for core platform services. These provisions prohibit self-preferencing, where businesses need to use the services of gatekeepers solely. The new set of restrictions also prevents app stores from blocking rival installations.

Also, they are obliged to share their platform-generated information with them. It also mandates data portability and service interoperability, with restrictions imposed on tracking users for targeting advertisements without consent. Gatekeepers must also allow users to uninstall preloaded applications.

The internal market commissioner of the EU, Thierry Breton, stressed the aims of the DMA to address unfair practices that tech giants are using. He also noted that certain tech giants have undermined consumer choice and hindered competition.

These practices distort competition, undermine free consumer choice, and hold back SMEs' innovation potential, notably arising from Web 4.0 and virtual worlds.Thierry BretonViolators Can Face Hefty Penalties

Penalties for violating the DMA can be severe, scaling up to 10% of global annual turnover or even 20% for repeated, serious offenses. The Commission may ban gatekeepers from acquiring related services following repeated instances of non-compliance.

It's expected that the DMA would be fostering competition on major platforms. This would facilitate the entry of alternative payment services, independent app stores, and new search engines in the market while retaining the gatekeepers.

Jimmy Fitzgerald, the CEO of payment unicorn Paddle, welcomed the designation of gatekeepers. He highlighted the advantages for software developers in terms of third-party app stores and payments.

However, it remains to be seen how effective the DMA turns out to be in rebalancing the digital landscape dominated by Big Tech giants.

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